ing vitaling
Annual Report 2020
with care with
r Sto products
Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
energy to heat houses
coatings Storing vital used in computer chemicals used products with care screens in headsets
We store products that are vital for everyday life. The energy that allows people to cook, heat or cool their homes and commute to work. The chemicals that enable companies to manufacture millions of useful products. The edible oils to prepare food. Vopak is the world’s leading independent tank storage company and we take pride in storing vital products with care, for a growing world population.
energy to charge laptops cosmetics
Cover page The symbols used on the cover represent just some of the end-uses of the products we handle: polymers in clothes, energy to heat houses polymers in clothes and charge laptops, cosmetics, chemicals and coatings used in headsets and computer screens.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
2 Introduction 54 Sustainability In this report 2 Vopak at a glance 56 Introduction to sustainability 4 CEO statement 58 Governance and basis of preparation 63 Consolidated Sustainability Performance Purpose & strategy 64 Care for our societal impact (people) 7 8 Our purpose 74 Care for our environmental & climate impact 9 Our strategy (planet) 14 Our value creation 84 Care for our economic impact (profit) 16 Our responsible business conduct Governance, risk & compliance Business & market 92 93 Supervisory Board report 21 22 Letter of the Executive Board 97 Supervisory Board members 4 24 Our business environment 98 Executive Board members CEO statement 27 Our business 99 Remuneration report 108 Corporate Governance 31 Performance & Outlook 112 Corporate Governance statement 32 Our performance 115 Risk management & internal control 33 Financial performance 128 Shareholder information 36 Leading assets in leading locations 38 Operational leadership Financial Statements 40 Service leadership 131 133 Consolidated Financial Statements 42 Technology leadership 207 Company Financial Statements 44 People leadership 212 Executive Board declaration 48 Key developments by division 213 External auditor’s reports 7 48 Americas Purpose & strategy 49 Asia & Middle East Additional information 50 China & North Asia 222 223 Non-IFRS proportional financial information 51 Europe & Africa (unaudited) 52 LNG 226 Profit Appropriation Our performance 53 Outlook 227 Stichting Vopak (Vopak Foundation) 228 Five-year consolidated summary 229 Glossary 32 231 Contact details
Disclaimer PDF print – this document is only a ‘printed version’ and is not the original annual financial reporting including the audited financial statements pursuant to article 361 of Book 2 of the Dutch Civil Code. These original annual financial reporting, including the audited financial statements and the auditor’s report thereto are included in the single report package which can be found at https://www.vopak.com/investors/reports-and-presentations/company-reports. Vopak Annual Report 2020 In any case of discrepancies between this ‘printed version’ and the report package, the single report package prevails. Introduction
Vopak at a glance Vopak at a glance
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Vopak at a glance 2
Vopak Number Number Storage capacity of terminals of countries In million cbm at a glance 70 23 35.6 at year-end 2020 34.4 35.6
2019 2020 Royal Vopak is the world’s leading independent tank storage company. With over 400 years of history and a focus on sustainability, we ensure safe, Market capitalization Number of employees Total Injury Rate (TIR) clean and efficient storage and handling In EUR billions In FTE In 200,000 hours worked by own personnel and contractors of bulk liquid products and gases for our customers. By doing so, we enable the delivery of products that are vital to the 5.4 5,637 0.37 0.37 economy and the daily lives of people 17% 83% 0.34
across the globe, ranging from chemicals, 2019 2020 oils, gases and LNG to biofuels and vegoils. We are determined to develop key infrastructure solutions to facilitate the transition of the world’s changing energy FY2020 EBITDA1 FY2020 EPS1 FY2020 ROCE1 and feedstock systems. At the same time, in EUR millions in EUR -excluding exceptional items- we invest in digitalization and innovation to -excluding exceptional items- -excluding exceptional items- improve our performance and our service to our customers. Vopak is listed on Euronext 792 2.42 11.6% Amsterdam and is headquartered in Rotterdam, the Netherlands.
1 For a reconciliation between the IFRS numbers and the amounts excluding exceptional items, reference is made to note 2.2 of the financial statements.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Vopak at a glance 3
Q1 Q2 Q3 Q4
January April July October • Vopak finalized the divestment of its terminal • Vopak and Keppel Data Centres agreed on a • Vopak issued over USD 500 million equivalent • Vopak and Chandra Asri agreed on a new at Algeciras, Spain, completing the European feasibility study into new LNG and hydrogen of debt in the US private placements market. partnership to explore opportunities for divestment program announced in 2019. infrastructure as part of Singapore’s Floating industrial infrastructure services in Cilegon • PT2SB in Malaysia repaid part of its preference Data Centre Park development. August in Indonesia. share capital following the completion of new • Vopak announced its initial investment in the • Vopak’s terminal at Vlissingen in the Netherlands financing arrangements for the associate 50/50 joint venture Vopak Moda Houston brought a further 9,200 cbm of pressurized November industrial terminal. terminal located in the Houston Ship Channel, storage capacity into operation for LPG and • Vopak announced plans to add 20,000 cbm including 46,000 cbm capacity of various gas chemical gases. for chemical products to its Alemoa terminal February tanks and a new jetty for the storage and in Brazil, further strengthening the company’s September • Vopak announced plans to expand its handling of chemical gases. position in Santos, Latin America’s leading port. • Vopak and BlackRock agreed to buy three US Vopak Shanghai – Caojing Terminal, adding • Vopak brought its 100,000 cbm Lesedi terminal Gulf Coast industrial terminals from Dow for 65,000 cbm of extra capacity for chemical June near Johannesburg, South Africa, into operation. USD 620 million. The terminals have a combined gas products. This industrial terminal serves • Vopak finalized its expansion project at The terminal is connected directly to Durban capacity of 852,000 cbm and will serve three chemical plants located in and around Bahia Las Minas in Panama, adding a further via a multipurpose pipeline. key production complexes of Dow. the Shanghai Chemicals Industry Park. 40,000 cbm to bring total capacity at the • Vopak commissioned 160,000 cbm capacity at • Vopak started a share buyback program to terminal to 375,000 cbm. December its Durban terminal in South Africa, supporting • Vopak and ExxonMobil agreed on a partnership return EUR 100 million to shareholders over the import of cleaner and lighter fuels into to explore the feasibility of an LNG import the course of 2020. the country. terminal in South Africa. March • Vopak and its partners started construction of • Pengerang Independent Terminals (PITSB) in the 25 megawatt Vopak Solar Park Eemshaven Malaysia commissioned an additional 215,000 located in the Netherlands. cbm of capacity, to serve the Singapore Straits – Asia’s main energy hub in Asia.
Vopak Annual Report 2020 CEO statement CEO statement
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
CEO statement 4 CEO statement
In a challenging year, Vopak continued fulfilling its role in society by storing vital products with care. We stay committed to innovation and a more sustainable world.
While the Covid-19 health crisis will hopefully subside Ensuring business continuity in 2021, its long-term effects on the global economy, the I am extremely proud of all the colleagues, contractors and energy transition and society at large are still to be defined. other port workers who went the extra mile to enable Vopak In any case, its impact is likely to be felt throughout the to maintain business as usual in unusual circumstances. decade. On the positive side, the pandemic led many to They are Vopak’s own heroes, working every day in spite rediscover the values of health and community; it also of challenging circumstances. Our strategy to be leading showed that global cooperation and concerted action are in digital, allowed us to move overnight to remote working possible and key to address the challenges and opportunities from home where possible. Ours is a physical business, so of our time. This time calls for public parties and businesses presence at the terminals is key. With stringent measures to join forces for a sustainable economic recovery and in place to protect their health, many colleagues continued climate action. their work at our terminals to ensure business continuity. With agility and teamwork, we found ways to manage the situation effectively. Safety observation rounds continued. “We delivered good Thankfully, we did not record any severe personal safety or process safety incidents. We also progressed with our results in a more volatile sustainability ambitions. business environment.” It was hard work to realize our business performance plans, which had appeared so realistic at the beginning of 2020. At Vopak, we store vital products with care. Through our Nonetheless, despite significant headwinds in chemicals Eelco Hoekstra global network, we enable society to function by ensuring and in foreign exchange movements, as well as project Chairman of the access to products that meet people’s everyday needs – delays due to the pandemic, we continued to focus on Executive Board including chemicals to produce disinfectants, face masks and both short-term performance and long-term value creation. and CEO of other protective equipment. We aim to be the sustainability We worked to improve in safety and health. We maintained Royal Vopak leader in our industry and live up to our purpose. We care for solid governance and control. And we stepped up efforts safe, clean and efficient storage. We care for the safety, health to deliver on our 2020 financial results and cost reductions. and wellbeing of our employees, contractors and neighbors. We proved resilient and defended our financial performance We care for the capital our investors entrust us with. We care in 2020. for a resilient and sustainable society.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
CEO statement 5
Transforming our portfolio In hydrogen, our teams are driving a range of options in become a data-driven company. The latter paves the way We delivered strongly on our strategic agenda and the our new business development funnel. We explore how for further digital innovation. Via Vopak Ventures, which consists transformation of our portfolio. I was particularly excited to facilitate imports of green hydrogen to the Netherlands of a Digital Fund and a Sustainability Fund, we invested in about the major acquisition of three industrial terminals from and Germany, with potential supply chains originating a few promising start-ups and scale-ups, including platform Dow along the US Gulf Coast, in partnership with BlackRock. in Southern Europe, Morocco, the Middle East and technologies. As the global leader in our industry, we aim to This is the fruit of our decade-long dedication to contribute South America. We also work on infrastructure solutions contribute to enhancing port logistics and supply chains around to the long-term success of our customers. It was also to help the industry in the port of Rotterdam decarbonize the world, adding value beyond the boundaries of our own a reward for our consistent focus on expanding our footprint through large-scale use of blue hydrogen. In Singapore, terminals and our customers’ operations. in industrial terminals, which organize product flows for we are exploring the potential of low-carbon ammonia for entire petrochemical clusters in a safe, sustainable and shipping and of flow batteries. To meet the rising demand Making a difference efficient way. of biofuels in Northwest Europe, we will expand storage We are getting ready for the world of tomorrow. We strive in the port of Rotterdam for waste-basted renewable to live up to our purpose by focusing on delivering long-term With the same dedication, we continued to drive the feedstocks for the production of biodiesel. value creation for society at large. By contributing to those transformation of our portfolio towards lighter fuels, United Nations Strategic Development Goals where we chemicals and new energies. We made progress with our In 2021, some new energies projects should start can make a difference. By managing our environmental and four LNG terminals and our LNG business development materializing. We now have a healthy funnel of new energies carbon footprint and setting targets to reduce greenhouse funnel. We upgraded and expanded our chemicals terminals projects in our focus areas, and I am confident that we will gas emissions and emissions to air, water and soil. And by in Rotterdam, Antwerp and Houston, while the Rotterdam continue to build upon the progress reached so far. On top continuing to promote diversity and inclusion, and care for Botlek team made improvements in managing out-of-service of that, we are building a solar park in the North of the our employees, contractors and communities. Vopak wants capacity through its turnaround project. And we increased Netherlands, which will enable us to gain understanding of to be a force for good in our communities. I deeply respect the share of lighter fuels in Panama, Australia and South the field of renewable electricity as an operator and minority the efforts of all the colleagues who allow us to realize Africa. We will stay on course in the coming years, with a investor and provide electricity to the equivalent of 8,000 that ambition. A good example are the Covid-19 donations continued focus on the transformation of our portfolio and Dutch households. sponsored by the Vopak WeConnect Foundation, as well as through growth in industrial terminals, gas and chemicals. many other initiatives led by colleagues to help provide relief Driving digital innovation in our communities. The pandemic highlighted the benefits of our digital “We are ready for the world transformation. It is no small achievement that our teams On behalf of the Executive Board, let me wholeheartedly managed to ensure that all our systems kept running smoothly, thank our colleagues, contractors and partners for their of tomorrow. We strive enabling us to maintain contacts with colleagues, customers dedication and hard work to ensure safe and uninterrupted to live up to our purpose.“ and many other stakeholders. Our digital modernization services in a challenging year for all of us. I also thank our program is moving full steam ahead. Our IT system for customers, shareholders, authorities and our communities customer operations interface MyService is now live at for their trust and support, which enable us to play our role Over the past years, our activities have been moving beyond 14 locations, including Malaysia, Singapore, the United States, in society. Finally, my gratitude goes out to the health storage, with a stronger focus on organizing infrastructure Colombia, Venezuela and Panama. And our finance & workers, teachers, policewomen and -men, relief workers for industrial complexes and facilitating new supply chains. procurement platform, Oracle Cloud, works at nine locations, and government officials and all the other people who In the field of new energies, we are accelerating in four among which the Netherlands, Singapore, the United States, worked tirelessly to care for all of us. focus areas: facilitating new value chains by developing Panama and Australia. Our investments in digital innovation
infrastructure solutions for hydrogen, CO2 and low-carbon help us improve safety, sustainability and efficiency, Eelco Hoekstra feedstocks, as well as developing flow batteries. provide better service to customers, and more generally Chairman of the Executive Board and CEO of Royal Vopak
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Highlighting the LNG feasibility importance of safety, study for health and the South Africa environment
Care for Safety, Vopak and Health & Environment (SHE) ExxonMobil sign is our core value memorandum of understanding
The virtual SHE Day in Malaysia was held to remind colleagues Vopak will work together with ExxonMobil to assess the commercial, to continuously live up to our core value and watch out for technical and regulatory aspects of an LNG regasification terminal each other while facing challenges of the Covid-19 pandemic. in South Africa with the aim to bring LNG into the country.
Safety, health and environment has become even more important as we all had The companies have successfully worked together for several decades. Future to embrace a new way of working in 2020. Members of Vopak’s Executive Board projects that would come from this study can help ensure the security of South Africa’s and Global Operations & Technology joined this online celebration. gas supply and may have the potential to help improve air quality in South Africa.
Vopak Annual Report 2020 Purpose & strategy Purpose & strategy
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
8 Our purpose 9 Our strategy 14 Our value creation 16 Our responsible business conduct
Purpose & strategy
Vopak Annual Report 2020 Our purpose Our purpose
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our purpose 8 Our purpose: We enable the delivery of vital products for the economy and daily storing vital products lives of people across the globe with care
Demand for energy, food and chemicals is growing as populations increase and become more prosperous. As the world’s leading independent tank storage company, we connect supply and demand for these products and enable the delivery of products that are vital to the economy and daily lives of people across the globe.
To do so, we operate a global network of storage and ...with care logistics terminals at strategic locations along major While the products in our tanks are crucial to people’s trade routes. We ensure safe, clean and efficient storage everyday lives and to the economy, they can impact people’s and handling of bulk liquid products and gases for health and the environment if badly stored or handled. It is our customers. our role and responsibility to ensure safe, clean and efficient storage. We have a commitment to care, which extends Storing vital products to all our stakeholders, including our colleagues and Our work enables people to meet basic needs: to cook and contractors, our customers and the communities in which heat their homes, go to work and travel the world. We help we operate. maintain homes, allow factories to operate and companies to manufacture useful products that people use in their daily lives. Our long-term success depends on our ability to innovate and respond to changing demand from society and the markets in which we operate. Vopak is determined to develop key infrastructure solutions to facilitate the transition of the world’s changing energy systems. Today, we store chemicals, oil, gases, biofuels and edible oils. In the future, we also expect to store products like hydrogen and provide
infrastructure for CO2.
Vopak Annual Report 2020 Our strategy Our strategy
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our strategy 9 Our strategy We have a long-term vision of the products Vopak operates a global network of terminals worldwide. Through these terminals, we and infrastructure enable the delivery of products for the energy, chemicals and food & agriculture industries. that society will need Our network of terminals helps customers deliver their Leading assets in leading locations products to market. We adapt to constantly changing markets In our business, location is vitally important. Over the years, and product flows, resulting from shifts in climate policies, in we have grown our portfolio of terminals; we have geopolitics and the development of new energy sources and strengthened Vopak’s value proposition across the cleaner fuels. At the same time, we have seen increased company’s strategic terminal types: digitalization and the introduction of new technologies – these • New energy & feedstocks create significant opportunities for our business. To respond • Gas terminals effectively to these changes, we need to be flexible. We also • Industrial terminals need to have a long-term vision not only of the best locations • Chemicals terminals for our terminals, but also of the products and infrastructure • Oil terminals. that society will use in the years ahead. Our aim is to have a diverse portfolio of terminals – a strong In 2020, our strategy continued to be robust, despite the asset base at a competitive cost of ownership. Covid-19 pandemic. We put in place effective controls to continue operations and protect people working at In deciding where to locate or acquire our terminals, our facilities. No material changes were required to we consider a number of factors: patterns of supply and our strategy, goals or objectives. All terminals remained demand, international trade, the location of industrial operational and there were no significant disruptions clusters, population growth and sustainability. Given that to business continuity. production often is not located close to demand, global growth in demand will increase trade flows, and open up Strategic tank model opportunities for Vopak. Our strategic tank model is based on leadership pillars and a foundation that support us in creating value for all Operational leadership our stakeholders including society at large as shown on the Vopak has high standards in safety, sustainability, service next page. and costs – this is how we aim to differentiate ourselves from our competitors. Safety is our first priority. We abide by existing rules and regulations as a minimum – and adopt best practice where possible. Our aim is to be an industry leader in designing, engineering and commissioning new assets, in project management and in operating and maintaining our existing terminals.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our strategy 10
Vopak’s terminals are governed by global standards that often Increasingly, at Vopak, we work with mobile devices but also future development. In our salaries and benefits, go beyond local regulatory requirements. We realize that our providing us with real-time information. At the same time, we look to reward individual performance, and encourage license to operate and our license to grow depend on our sensors and meters are allowing us to develop smarter employees to pursue assignments outside their home countries. ability to manage our facilities safely and responsibly. We terminals – and plan maintenance work more effectively. have policies, standards, systems, toolkits and core processes Vopak values and founder’s mentality that support our ambitions in this area. We provide extensive People leadership Underpinning these leadership pillars is Vopak’s foundation training programs for both employees and contractors. Our people are vital to our company and performance. As – our founder’s mentality and our Vopak values. Our When selecting contractors, safety performance and an employer, we want to inspire and challenge our people. We founder’s mentality involves not limiting ourselves to what experience are critical qualifying criteria. We look at ways are helping them develop the right capabilities and leadership we know now, or what has worked in the past, but being of introducing new, safe and more sustainable technologies skills, and we aim to instill high standards of ethics and always open to new solutions and opportunities – always to improve our systems and processes. We also apply integrity. Our aim is for a highly motivated, skilled, agile and applying an entrepreneurial approach. The Vopak Values are sustainability criteria to our key suppliers. diverse workforce and an inclusive culture. We want to have the foundation of our approach to business. They act as a the right people with the right skills, in the right place and time. guide to decision-making, and serve as the company’s moral Service leadership We also need to attract new talent – to do so, we have a compass. It is this foundation that allows us to work together, We operate efficiently, by keeping costs down and strong focus on career development and on-the-job learning. to live up to the company’s purpose – and to invest in the shortening processing times where possible. In doing so, Our employee appraisals address not only past performance long-term success of both Vopak and its stakeholders. we help improve customers’ business performance. In this area, we are committed to constant improvement – by listening to our customers and anticipating their needs. Strategic tank model Wherever we operate, our goal is to be the best in port. We regularly survey customers, so we can use their feedback to improve our services. Vopak plays a fundamental role in customers’ supply chains, providing vital infrastructure. We realize we can add value here by providing customers with easy access to real-time information – on loading and waiting times, for example. We have built long-term trust with our customers not only through high levels of customer service, but also through our commitment to safety and sustainability.
Technology leadership We are using more digital technologies. These help us improve safety and customer services; in many areas, they allow us to work more efficiently, saving costs and energy. With technology, we are better connected to our customers. Data analytics allows us to speed up supply chains both for ourselves and our customers. We can also bring in external data using our new API-based platform.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our strategy 11
Sustainable Development Goals Vopak supports the Sustainable Development Goals (SDGs) and specifically embraces five SDGs. These are the areas where we believe we can create the most value for stakeholders and society as a whole – by supporting the transition to better, lighter fuels and low-carbon energies, in providing a safe working environment, in preventing air, water and soil pollution, and in building resilient, sustainable infrastructure at ports around the world.
SDG Vopak’s contribution Ambitions & targets
Ensure access to affordable, reliable, sustainable and Vopak contributes to facilitating energy security and the energy • Facilitate introduction of lighter, cleaner and less polluting fuels modern energy for all transition by creating reliable access to energy and developing • Develop new infrastructure solutions for low-carbon energy and feedstocks infrastructure solutions for future low-carbon energy and feedstock • Our ambition is to be climate neutral by 2050 ecosystems, facilitating new product flows like hydrogen, ammonia and
CO2. Our main contribution to combating climate change is in facilitating Take urgent action to combat climate change and its solutions that enable producers and customers along the value chain impacts to reduce their CO2 footprint. We also aim to reduce our own carbon footprint and improve our energy efficiency. We aim to minimize the negative impact of our activities on climate.
Promote sustained, inclusive and sustainable economic In storing vital products today and tomorrow, safety is our first and • Zero fatalities and major incidents and reduce Total Injury Rate (TIR) growth, full and productive employment and decent foremost priority. This includes ensuring a safe and secure working • Improve diversity in management in terms of both gender and work for all environment for all people working at and for Vopak. nationality
Build resilient infrastructure, promote inclusive and To realize our purpose, we develop, maintain and operate reliable, Industry leader in: sustainable industrialization and foster innovation sustainable terminal infrastructure in ports around the world. We adopt • Sustainability, service delivery and efficiency standards and invest in environmentally sound technologies and processes. • Design and engineering of new assets We explore the introduction of more sustainable technologies and • Project management and commissioning of new assets processes and work on the digital transformation of our company. • Operating and maintaining existing assets throughout the Vopak network
Ensure sustainable consumption and production patterns We strive for environmentally sound management of the products we • Reduce Process Safety Event Rate (PSER) store and handle, and we work hard to minimize any negative impact on • Reduce releases of harmful products to the environment the environment, in particular by reducing releases to air, water and soil. • No uncontained spills
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our strategy 12
New energy Gas Industrial Chemical Oil & feedstocks terminals terminals terminals terminals
LPG LNG
Vopak actively pursues Vopak is expanding its gas Petrochemical clusters are Demand for chemicals storage Vopak operates oil hub opportunities in new energies storage – in response to becoming larger and more is growing. Vopak operates a terminals located strategically and sustainable feedstocks. We increased demand from complex, making logistics global network of chemicals along major shipping routes, aim to develop infrastructure petrochemicals, gas-fired power integration even more crucial. terminals; in particular, we where suppliers, customers and solutions for the world’s plants and transport. Vopak Industrial terminals have a single have a strong presence in traders are active. These include changing energy and feedstock continues to contribute to operator, typically serving multiple key hub locations, including Rotterdam, Fujairah and the systems. Our strategy for new the energy transition by plants at the same time. This Antwerp, Rotterdam, Singapore Strait. We also play energies is to facilitate new introducing new infrastructure makes optimizing terminal logistics Singapore and Houston. an important role in ensuring supply chains for hydrogen, for cleaner fuels like LPG and easier. Many petrochemical Besides growth opportunities, countries with structural oil
CO2 and new feedstocks, as LNG. We own and operate LPG clusters adopt this model because we are also looking at ways supply deficits have adequate well as develop flow batteries. terminals in the Netherlands, of the size and complexity of their of operating our terminals access to energy imports. Vopak has made first China and Singapore; we have operations. Industrial terminals more efficiently and further investments in hydrogen LNG facilities in Colombia, typically have long-term customer strengthening customer and is exploring further Mexico, the Netherlands and contracts – since terminals are service. opportunities in Europe and Pakistan. integrated into the customer’s beyond. In Asia, we are facility. We operate industrial exploring the potential of terminals in the US, Europe, low-carbon ammonia and Middle East, Asia and China. flow batteries.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Capacity equal Excellent safety to an average performance with consumption of more than 1,000 approximately 8,000 contractors on site Dutch households Successful expansions Start of construction in South Africa Vopak Solar Park Eemshaven
Vopak is a key service provider in the fuel supply market Vopak Solar Park Eemshaven is a joint venture with the in South Africa, due to our strategic locations in Durban parties Groningen Seaports, Vopak and funds managed and Lesedi. by Whitehelm Capital.
Excellent safety performance was achieved during the project as a direct The solar park will be built on 19 hectares of land around the Vopak Terminal result of the dedication to safety from local management, combined with Eemshaven, in the Netherlands. The new solar park will have a capacity on-site supervision. By expanding our storage capacity our customers can of approximately 25 megawatts, with the first green power expected to meet the growing demand for cleaner fuel. be supplied to the electricity grid in the third quarter of 2021.
Vopak Annual Report 2020 Our value creation Our value creation
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our value creation 14 Our value creation
Our long-term value creation takes key socio-economic issues into account. We aim to create value for all our stakeholders – from customers and business partners to investors, employees and local communities. Vopak’s business, financial and investor strategies are founded on this principle.
The products we handle provide power, energy for light, Value creation model cooking and heating, and form the basis of millions of useful Our value creation model1 is shown on the next page. products and household goods. We handle enough energy This model describes both the resources we consume each year to power more than 120 million households. (inputs) and the value we create or deplete during the course of our business (outputs). Importantly, this model Through the payment of taxes, dividends for shareholders allows us to identify where particular strategies or and salaries for employees, we create financial value. investments may create value for one stakeholder group, We enable efficient services that benefit our customers but reduce value for another. and the wider communities we serve. We also create social value – our engagements with different stakeholders like governments, business partners and our communities are proactive and transparent, and help us work together in a mutually beneficial manner, building long-lasting relationships based on trust.
Each year, At the same time, we are aware that, through our business activities, we may also deplete value – through accidents, we handle enough for example, or damage to the environment. That’s why we energy to power work hard to minimize these impacts. In operating our more than 120 million business, we also consume resources – we invest in our facilities and terminals and make use of natural resources households like water and energy. We manage these resources to the highest level of responsibility.
1 Vopak’s model is based on the framework published by the International Integrated Reporting Council (IIRC). For more information, see www.integratedreporting.org.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
15 Input Outputs Impact1 Outcomes
People Customers People We continued to deliver product to customers Time, expertise and resources of We create value • Employee engagement safely and efficiently – without serious process incidents; we were able to maintain operations both employees and contractors score of 85% through the year despite the Covid-19 pandemic. • 5,637 employees (in FTE) and more • EUR 406 million in salaries, than 10,000 contractor person-years for our stakeholders Customer service levels, as measured by NPS, benefits and pension contributions increased further – confirming that customers • Average 36 hours spent on training • Total Injury Rate2 of 0.37 and development per employee and society appreciate our service levels. Employees & contractors Systems & Processes Systems & Processes Total injury rate slightly deteriorated, however In 2020, we handled 170 million severity of personal incidents was lower than Company-wide systems, processes, • Safely handled 170 million last year; The sickness absence rate was kept controls and minimum standards metric tons of products for society metric tons of products low at 2.2%, despite Covid-19 challenges. • EUR 44 million invested in IT • Process Safety Event Rate2 Salaries, benefits and pension contributions infrastructure and systems of 0.14 were in line with last year. Employees receive • Vopak Fundamentals on Safety a fair and liveable compensation; again, all countries were found to be compliant with the living wage principle.
Social & Relationships Social & Relationships Investors Payments to investors increased by more Relations with stakeholders, including • Net Promoter Score of 67 than 30%, reflecting higher dividends customers, business partners, governments, • EUR 260 million in payments and the share buyback program. authorities and local communities to contractors, suppliers Value was lost, however, through lower • More than 500 customers globally and other business partners share prices which declined by 11%. • More than 50 joint venture partners to operate our business We continued to invest in our business, around the world increasing overall storage capacity by 5% mainly in Asia and the Americas. Financial New growth projects were announced Financial in China, Brazil and the US. Available funds, including equity, debt, storage fees and other forms of revenue • EUR 325 million paid to investors Governments & authorities • EUR 3.0 billion in shareholders’ equity in dividends, share buybacks We continued to support public services • EUR 2.6 billion in interest bearing debt and interest through tax payments. We paid a fair tax • EUR 55 million paid in income tax in the countries in which we operate. • Investments of EUR 525 million in We also complied with all safety, health new growth projects and environmental protection laws. Again, in 2020, we received no fines Terminals & Equipment for non-compliance in these areas. Business environment changes: Terminals & Equipment Vopak’s network of terminals, including • EUR 271 million spent on Local communities energy transition, During 2020, we continued to reduce storage tanks, pipelines, jetties and other sustaining and service facilities societal impact of our VOC emissions in line sustainability & digitalization improvements with our investment program. We increased • 70 terminals in operation globally • Increase in total storage • 35.6 million cbm in storage capacity GHG emissions as a result of our increased capacity of 1.6 million cbm portfolio. Despite improved energy efficiency, GHG intensity further increased. The number of uncontained spills increased. Natural Natural Business partners & suppliers Natural resources, including energy and water, • Societal impact of VOC In 2020, total payments to suppliers and other as well use of land and sea for company facilities emissions reduced by business partners reduced. We continued • 4.1 billion KwH in energy consumption 19% compared to 2016 to invest in joint ventures around the world. (direct and indirect) of which 64% from • GHG emission of 444,150 New opportunities for business partners renewable sources were also created through capacity expansion metric tons of CO2 equivalents • 1,550 hectares of land and conversions at several major terminals.
1 More information on the United Nations Sustainable Development Goals that connect to the heart of our activities can be found on page 11. 2 Number of injuries for every 200,000 hours worked by employees and contractors.
Vopak Annual Report 2020 Our responsible business conduct Our responsible business conduct
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our responsible business conduct 16 Our responsible Our ambition is to be the sustainability leader in our industry and live up business conduct to our purpose: storing vital products with care Vopak aims to create value for all our stakeholders including society at large. Our approach to responsible business conduct is based on care for people, planet and profit.
This principle is built into our purpose as a company: storing to human rights, non-discrimination, fraud and corruption. The vital products with care. We strive to be a responsible Code also includes provisions on anti-money laundering and member of society and the communities in which we compliance with international sanctions. These are important operate, a company that our employees and contractors topics for Vopak as we operate worldwide, including in may be proud to work for. To achieve this, everyone at Vopak countries with higher risk of corruption and poorer human needs clear guidance, through ground rules and policies. rights. The Code is applicable to all Vopak employees and contractors – we provide regular training in the Code to Our moral compass ensure high standards. We also have a whistleblower policy, Vopak Values allowing employees and other stakeholders to report alleged The Vopak Values are the foundation of our approach to Code of Conduct violations in confidence. We follow up on all business. It’s vital that our employees, contractors and joint complaints, and take remedial action where needed. venture partners understand and share these values. Sustainability Policy There are five values in all: Our choices today must contribute to our long-term • Care for safety, health and the environment relevance in society and the well-being and development • Integrity of future generations. We are committed to minimizing the • Team spirit negative effects of our business activities on people’s safety, • Commitment health and well-being. We do this by prioritizing personal • Agility and operational safety, and working hard to reduce our environmental footprint. We invest in training, talent These values are embedded in our policies and frameworks, development and in building a diverse and inclusive workforce. including our Code of Conduct. They act as a guide to We contribute to a more sustainable economy by introducing decision-making, and serve as the company’s moral compass. more sustainable technologies, processes and facilitating the energy and feedstock transitions. Code of Conduct Vopak’s Code of Conduct sets out our expectations with Our ambition is to be the sustainability leader in our industry regard not only to safety and the environment, but also and live up to our purpose: storing vital products with care.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our responsible business conduct 17
Safety and health a clear responsibility, in this respect, to the communities Preparing for emergencies We handle hazardous products – so safety is our number in which we operate. Vopak has a robust environmental Given the nature of our business, there’s always the one priority. We have company-wide safety principles, management process. We use API RP 754 – the American possibility of a safety incident. Our Terminal Health the Vopak fundamentals. Care for safety, health and the Petroleum Institute’s recommended practice for the refinery Assessment (THA) and Assure program focuses on major environment is built into both our Code of Conduct and our and petrochemical industries. Our Environmental accident prevention. Terminals are regularly audited to make Supplier Code. We provide rigorous safety training to those Management System is included in Vopak’s internal sure they meet the standards. Our assets – tanks, pipelines, working at Vopak locations. standards (as part of our Environmental Impact Assessment pumps and jetties – are regularly maintained. We have a and Soil & Groundwater Management). With environmental rolling three-year maintenance program. All assets are Vopak’s safety fundamentals include guidelines on controls – as with safety – we make a point, in many cases, properly designed, with safety paramount. The program transferring products, managing change, on permits, of going beyond legally-required minimum standards. also helps ensure we have employees able to respond lock-out – tag-out, excavation, motorized vehicles, and quickly to emergencies and a safety-first culture to working in confined spaces and at heights – a common We have put in place a program of improvements at our prevent accidents. cause of accidents in the industry. As a minimum, we terminals to further reduce emissions of VOCs (volatile organic comply with laws and regulations. We systematically discuss compounds). VOCs can cause air pollution and may pose a Vopak’s terminals are equipped and tested annually on and report work-related injuries, fatalities and illnesses1, health risk, which is why we assess not only the emissions their emergency and crisis response. At our terminals, as well as safety incidents like spills and fires, with a view themselves, but also their overall social impact – which we aim a typical Emergency Response Plan (ERP) includes to further strengthening our Safety, Health & Environment to reduce by at least 20%. We work hard to make our carbon different scenarios, as well as recommended responses (SHE) performance. Since 2019, we are rolling out our footprint smaller and our ambition is to be climate neutral and escalation procedures. Local authorities are also Trust & Verify program. The aim of this program is to increase by 2050. Worldwide, we are responsible for approximately involved closely in drawing up these ERPs. awareness of safety issues, and to encourage a culture of 1,550 hectares of land. So, it is important that we avoid spills personal accountability throughout the company. We are that may contaminate local soil, groundwater, or the sea. Our Human rights and decent work also bringing in more technology which helps us to identify aim is to have no uncontained spills. As part of our standards, We respect international human rights and labor rights2. risks sooner, often in real time. This gives us the opportunity we require our terminals to have secondary containment, We screen major investments for potential human rights to intervene early and prevent incidents before they happen; often additional barriers or walls where there is risk of a issues. With regard to labor rights and decent work, we it also allows us to work more remotely, and reduce the spill – in tank pits, for example, pumps or loading stations. have identified locations most at risk of violations – in number of employees and contractors potentially at risk. This secondary containment helps prevent spills seeping into these locations, we verify that at least minimum conditions All incidents – no matter how small – are reported, as are the nearby environment. As a result, spills that do occur are are being met. We also support the living wage principle, all near-misses. Reports are made directly in Enablon, our contained and cleaned up as quickly as possible. and work directly with contractors on health & safety incident reporting system. Alerts are sent out following standards, human rights, ethics and integrity. For incidents, and every quarter management discusses safety With regard to biodiversity, Vopak’s impact assessments employees, we provide competitive salaries and benefits – performance and lessons learned. cover not only air quality and possible contaminations, but we reward performance and work closely with trade unions also emissions of light (which can have an effect on bird and other employee representative groups at our terminals Environment behavior and migration), as well as noise and possible risks and facilities. In addition to our own staff, we employ We work to minimize damage to the environment – through to archaeological sites. Hazardous waste is regulated through thousands of contractors across our operations. During harmful emissions, for example, or accidental spills. We have our Waste Management standard; this applies to all entities. 2020, these contractors outnumbered Vopak employees.
1 Vopak applies OSHA 1904, relating to record-keeping and reporting of occupational injuries, fatalities and illnesses. 2 As set out in the International Bill of Human Rights (which includes the Universal Declaration of Human Rights, the International Covenant on Civil & Political Rights and the International Covenant on Economic, Social & Cultural Rights). Vopak’s policies are also based on a number of other international agreements, including: the International Labor Organization’s (ILO) fundamental principles, the UN Guiding Principles on Business and Human Rights, and the OECD Guidelines for Multinational Enterprises. Vopak seeks to uphold international labor and human rights across its operations, as well as with suppliers, business partners, works councils and trade unions, within the limits of local laws and regulations.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our responsible business conduct 18
Contractors often work on construction sites, or on Transparency air quality (VOC and other air emissions), occupational health maintenance projects. We also provide regular safety and Our material issues & safety, water pollution and innovation. In the Sustainability operational training to contractors; their obligations are set Vopak carries out periodic materiality analyses. Together section we report in detail on the key topics and show the out clearly in our Supplier Code. Contractors and suppliers with our stakeholders, we define the material societal, connectivity table – addressing each topic directly to our must comply with this Code, as well as with Vopak’s environmental and economic topics for our company. A strategy. Other topics are reported based on compliance Sustainability Policy, living wage approach and international full materiality assessment – based on input from various with regulatory requirements and our response to actual human and labor rights standards1. stakeholder groups was performed in 2019. Ranking the societal topics. Our approach and detailed performance relevance of topics to stakeholders and the significance on each material topic and information on the methodology of the impacts, six key topics emerged as being the most used and process of the materiality analysis can also be material: process safety, business ethics & integrity, found in the Sustainability section.
a a a a op
o a op
Relevance to stakeholders a V a o a o Soil and groundwater pollution a po o Waste Greenhouse Gas (GHG) emissions Energy use Water management Biodiversity o o op a Application of best practices Customer acceptance and continuation Financial performance o a o Remuneration Supplier acceptance and continuation T axation
o a op o a pa o a a a a Training and education Nuisance Labor conditions Human rights Diversity Community engagement and charity Other topics Topics to monitor Key topics Significance of impacts
1 As set out by the International Labor Organization’s (ILO) fundamental principles and the OECD Guidelines for Multinational Enterprises.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our responsible business conduct 19
The Sustainability section presents information about the Climate change and societal developments are becoming impacts of Vopak’s activities on the society, environment increasingly important topics. On environmental controls, and economy linked to our value creation process. The we support recommendations from the TCFD (Task Force determination of (sustainability related) threats and for Climate-Related Financial Disclosures), and use this opportunities that could potentially impact Vopak’s portfolio framework to assess climate-related risks and opportunities, and/or strategy forms an integral part of our strategic and to stress-test our portfolio and strategy by using planning cycle. This is fully integrated into our risk management scenario analysis. For further details, see climate impact process, reference is made to the Governance, risk and on Vopak in the Sustainability section. compliance section. Responsible tax Risk management Vopak acknowledges that paying tax is part of its corporate Safety, health and the environment are also built into our social responsibility. In 2020, Vopak paid EUR 55 million in approach to risk management. We carry out regular risk corporate income tax. Vopak complies with both the letter surveys – and take action to mitigate risks. For 2020, the and spirit of the law. Vopak’s business strategy is leading principal risks included climate change, the energy transition in where we pay tax. As a result, tax is being paid in the and the risk of a major safety incident. The company’s countries where the economic activities take place. principal risks remain largely unchanged compared with 2019. However, the Covid-19 pandemic has led to higher Additional information levels of uncertainty in these risk areas. Furthermore, three Further information on these subjects and Vopak’s system of particular risks – market volatility, movements in oil & gas corporate governance can be found in the back-end of this prices and cyber breaches in IT/OT systems – have become Report in separate sections on Sustainability (pages 54-91) more apparent or have accelerated during 2020 (i.e. they and Governance, Risk and Compliance (pages 92-130). have increased in probability – not impact – compared with the previous year).
Since the start of the Covid-19 pandemic the company has monitored developments closely. Scenario-based contingency plans and other mitigating actions were prepared and were ready to be put in place if needed. Fortunately, no significant disruptions to business continuity and limited impact on our operations was observed – all terminals have remained operational throughout the year.
Vopak’s Executive Board has ultimate responsibility for risk management – we have an internal control framework, based on three lines of defense: operational controls at our terminals, oversight by divisional and global management, and internal audit, ensuring full compliance. Our internal control framework is regularly reviewed and updated, where necessary.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Teaching basic The terminal is coding skills being modernized to primary and and expanded secondary for the future school children Botlek terminal Care for our future hub for vital product communities around the world
The Botlek terminal in Rotterdam nears completion of its The Vopak WeConnect Foundation and PiFact0ry helped expansion of 15 state-of-the-art tanks to store vital products. students in local community centers and neighboring schools One of these vital products is Styrene. in Singapore to enhance their digital literacy.
Styrene is a chemical used to produce plastic products which are important in our Students were provided with coding starter packs to learn the basic python daily lives, for example, insulation material, gloves, car tires and pipes. With the new programming language. The goal of the program is to pique students’ interest tanks and improved infrastructure, we can offer better service for our customers in programming and enhance digital literacy. and provide meaningful contribution to society by storing vital products with care.
Vopak Annual Report 2020 Business & market Business & market
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
22 Letter of the Executive Board 24 Our business environment 27 Our business
Business & market
Vopak Annual Report 2020 Letter of the Executive Board Letter of the Executive Board
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Letter of the Executive Board
Eelco Hoekstra Chairman of the Executive Board and CEO of Royal Vopak
Frits Eulderink Member of the Executive Board and COO of Royal Vopak
Gerard Paulides Member of the Executive Board and CFO of Royal Vopak
2020 brought exceptional challenges to the Effective Covid-19 response We were able to keep all our terminals operating with world with the Covid-19 pandemic. Vopak The Covid-19 pandemic impacted all our lives. We appreciate minimum disruption and all our employees safe. the extraordinary efforts and commitment of all people working has navigated well through these challenges for Vopak to keep our company performing and safely serving The pandemic introduced new uncertainties into our and our strategy has proven robust. our customers and society by storing vital products with care. business environment. Our principal risks – climate change, Our first priority in the Covid-19 response has been to protect an inadequate response to the energy transition and risks During the year, we focused on maintaining services to our the health and well-being of our people, their families and the of a major safety incident – have not significantly changed. customers and financial performance, while prioritizing the communities in which we operate. We implemented business However, some risks have become more obvious, or health and safety of our people. At the same time, we continued continuity plans and were able to quickly establish a new way of have accelerated: market volatility, oil and gas market to execute our strategy, creating long-term value by transforming operating from home or at the terminal, while being supported price development and volatility and the risk of cyber our portfolio. We operated in a more volatile business by a well-organized IT infrastructure. We adapted governance breaches. We have monitored developments closely environment with increased global economic uncertainty and and control measures to the new reality, and once this new throughout the year and scenario-based contingency growing awareness of sustainability by society and companies, operating model was established, we were able to concentrate plans and other mitigating measures were ready to while seeing digital technologies evolve at high speed. once more on executing our strategy and business plans. implement, if needed.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Letter of the Executive Board 23
Delivering on our strategy use of data and platforms are key to both Vopak’s short-term reconfirmed that we are well placed to respond to risks Our strategy remains unchanged and proved to be well-suited performance and its long-term value creation. In 2020, and opportunities arising from the transitional and physical to the current operating environment, despite changes we invested EUR 44 million in new technology, innovations effects of climate change. brought by Covid-19. We continuously refresh our views on and replacing our IT systems. the strategic tank model that provided focus and served us Profit well in the last years. Strategy delivery progressed well in Performance We delivered EBITDA growth (post-divestments) in a more 2020, and we continued investing in growth – more than People volatile business environment. We have outperformed on EUR 500 million during the year, resulting in an additional During 2020, our total injury rate deteriorated slightly, costs to defend EBITDA and delivered on growth projects. 1.6 million cbm of capacity to meet growing customer however the severity of personal incidents was lower than However, some projects have been delayed due to Covid-19 demand, particularly in Asia and the Americas. last year. We are committed to improving safety in 2021 and we suffered from significant currency translation with our Trust & Verify program. This program aims to further headwinds. In 2020, we captured opportunities in our oil At the start of the year, we completed our European increase safety performance and encourage a culture of storage portfolio, resulting in improved occupancy rates. divestment program of four oil terminals and one oil personal accountability throughout the company, helping At the same time, we experienced reduced throughput terminal in China. We also announced the construction us prevent severe incidents and ensure a safe working for chemicals, particularly in Houston and Singapore. of a new chemical gases terminal in the US, capacity environment. We are also proud to support the living wage expansion for an industrial terminal in China and partnerships principle and provide a living wage to all employees. We We successfully issued new debt in the US private for industrial terminal developments. We have brought have included this principle in our Supplier Code and are placement market, and completed our EUR 100 million share new capacity into operation in Indonesia, Malaysia, Vietnam, developing standards on health & safety, human rights, buyback program, increasing distribution to shareholders. Panama and South Africa, albeit with some construction ethics and integrity with our contractors. We stepped Our share buyback program was complementary to our delays. We are further upgrading our chemicals terminals up efforts to strengthen customer service and create an continued investments in growth, sustaining, service in the ports of Rotterdam and Antwerp to further improve inclusive environment with a more diverse workforce. improvement and IT capex. our service delivery capabilities. Progress has also been Developing new skills, particularly in IT and data, remains a made with the development of our LNG projects in priority for the company. In 2020, we further strengthened We propose to increase our annual dividend to EUR 1.20 per Germany, China and Pakistan. An important milestone customer satisfaction, increasing our Net Promoter Score ordinary share, an increase of 4%. This increase reflects our in our strategy delivery was the acquisition, in partnership (NPS) to 67, up from 65 in 2019. continued resilient performance throughout a turbulent 2020. with BlackRock, of three industrial terminals from Dow in the US. This transaction expanded our global network Planet Looking ahead in industrial terminals and strengthened our leading position With our commitment to storing vital products with We are committed to position our company for long-term on the US Gulf Coast. care, we are helping meet the needs of a growing global developments, particularly continuing growth in Asia and the population and society’s wider environmental goals. US and strategically shifting toward more sustainable forms New energy systems are emerging and Vopak is well Safety for employees, contractors, communities and the of energy and feedstocks. We continue investing in growth positioned to capture opportunities. In 2020, we pushed environment remains our main priority. We will seek to and aim to allocate the majority of our growth investments ahead with our pre-final investment decisions on new further reduce our environmental footprint. Emissions to industrial, gas and new energies infrastructures. business developments of flow batteries, hydrogen and of Volatile Organic Compounds (VOCs) constitute the ammonia in Europe and Asia. most significant environmental risk from our operations. For 2021 and beyond, we will keep storing vital products Our multi-year improvement program to reduce the VOC with care to make a meaningful contribution to society, Implementation of our digital strategy is also progressing emissions has made significant progress, and social enabled by our financial performance. well. We continued to roll-out our cloud-based system impact from these emissions has been reduced by for our terminals in an efficient virtual manner and expect to 19% compared to 2016. Our ambition is to be climate be ready by 2023. Extending our digital capabilities and the neutral by 2050. Following our annual climate day, we The Executive Board
Vopak Annual Report 2020 Our business environment Our business environment
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our business environment 24 Our business environment Long-term Vopak operates in an ever-changing environment. Our business is global, but we are also trends driving subject to local conditions. 2020 was disrupted by the Covid-19 pandemic and its impact Vopak’s business on people, businesses and the global economy. remain valid
Despite the availability of effective vaccines toward the end Long-term developments of 2020, the pandemic and its knock-on effects are expected Despite Covid-19, the long-term trends driving Vopak’s to have a lasting impact in many areas. Key global trends business remain valid. These include population growth supporting Vopak’s business remain relevant and the move in emerging economies and increased urbanization. toward a cleaner and low-carbon energy economy has In non-OECD countries, we expect prosperity to increase, accelerated, providing opportunities to grow and develop with the continued rise of the middle class, particularly new infrastructure solutions and service offerings. in Asia and Latin America, leading to higher consumption and increased demand for the products we handle. Covid-19 and its economic impact With Covid-19, the world witnessed an unprecedented Geopolitical tensions and specifically sanctions continued event that impacted people’s lives as well as countries and to have an impact on trade. After a period of increasing economies in ways that may be considered unparalleled tensions globally, geopolitical and trade tensions are in recent history. Lockdowns, loss of jobs and greater expected to reduce somewhat in 2021 with a new uncertainty led to a shift in consumer behavior setting in US administration. motion a worldwide economic contraction. The damage represents one of the largest economic shocks the world Energy transition & sustainability
has experienced in several decades, despite extraordinary Awareness of climate change and the need to reduce CO2 efforts by governments to counter the downturn with fiscal emissions have continued to grow in 2020. A number of and monetary policy support. governments as well as large industries have committed
to reducing CO2 emissions. Countries are announcing or At the beginning of 2021, there are signs of improvement bringing forward bans on the sale of combustion engine in some regions of the world while the virus is still spreading vehicles to reduce climate change and promote the energy in others. As China re-opened its markets and lockdowns transition. As a result, electric vehicle sales are expected ended, its economy started to regain strength, whereas in to increase significantly in Europe. Europe the resurgence of infections is forcing countries to restrict mobility and large-scale gatherings. Restrictions are Circular economy and sustainability remain key topics with expected to continue until vaccines are distributed. GDP the need to intensify recycling, reduce waste and limit growth is expected to recover somewhat in 2021 after a pollution from discarded plastic. In 2020 however, we saw significant drop in 2020. However, a full recovery may not an increase in the use of plastics for packaging as e-commerce materialize until well into 2022. increased substantially as a result of lockdown measures.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our business environment 25
Impacted by the Covid-19 pandemic, total demand for Oil Gas energy dropped by about 5% in 2020. Energy demand is The year 2020 saw high volatility in the world’s oil markets. In 2020, there were reduced supplies of LPG as a result expected to recover beyond its 2019 level, though this may A price war started during the first quarter, increasing crude of reductions in upstream oil & gas production and lower take a few years. The energy mix is expected to shift production at a time when Covid-19 was spreading with refinery runs. Nonetheless, seaborne trade helped bring towards cleaner and renewable sources with solar energy demand dropping by over 20% in the following quarter. regional surpluses to deficit regions, especially to countries forecast to gain a significant share of energy generation Massive crude and petroleum product surpluses increased importing for the residential sector during Covid-19 over the next decades. global oil stocks rapidly, and market structures reached lockdowns, such as India, Indonesia and Brazil. Demand for unprecedented levels. With Covid-19 affecting demand, LPG was boosted by the start-up of eight new petrochemical Trends in our markets OPEC was quick to reduce oil production, and global stock plants in China, using LPG as feedstock. These plants were Chemicals levels started to come down during the third quarter. With able to benefit from the waiving of import duties on US LPG Chemicals business fundamentals remain fairly strong in lower crude oil production and recovering demand, crude oil under the US-China trade deal. the medium to long-term, despite a decrease in demand prices rose from $20 per bbl to more than $50 per bbl toward due to the Covid-19 pandemic and the effects of increased the end of the year. Oil prices are expected to remain under LNG has been least affected by the pandemic, with demand production capacity. The steepest fall in demand has been pressure until the economic recovery has fully taken place. in 2020 dropping just 2%, compared with 2019. Even so, for durable goods (automotive, construction, textiles and the decline in demand resulted in forces majeures being electric appliances), partially offset by robust demand in As a result of Covid-19, the peak in global oil demand is declared by LNG off-takers, affecting mainly US exporters. consumable consumer goods, such as packaging, cleaning, expected to be reached earlier than previously expected – Originally, 60 million tons of liquefaction FIDs were healthcare and pharmaceutical products. By the end of sometime in the late 2020s or early 2030s. Oil demand may expected for 2020. However, only one LNG liquefaction 2020, basic chemicals demand had mostly recovered to already have peaked in OECD countries; it is still expected project was announced on the export side as a consequence pre-Covid-19 levels, though demand for the year as a whole to continue increasing in emerging countries as a result of of low oil and gas prices – representing 3 million tons on the was lower than 2019. population growth and rising incomes. Demand for North American West Coast. petrochemicals will continue to support oil demand with During 2020, China continued investing in new production in more refineries pursuing downstream integration as a way During the year, sustained low LNG prices resulted in an effort to increase self-sufficiency, while the US continued of improving refining margins. According to the International increased coal-to-gas switching. Low LNG prices stimulated to build on its feedstock advantages from shale gas, and Energy Agency (IEA), total oil demand was 91.2 million gas demand for power in certain regions of India at the was also impacted by low oil prices and volatility. In 2020, barrels per day in 2020, down from 101.5 million barrels per expense of coal-fired power generation. Low prices are also Northeast Asia and North America have added almost day expected prior to Covid-19. encouraging increased use of LNG in marine shipping. 10 million tons of new ethylene capacity, representing around 80% of all additions globally. This overbuild will lead During 2020, refinery margins were poor, with global Despite short-term market turmoil, the outlook for LNG to declining operating rates and lower chemical prices at refining capacity additions reaching 2.4 million barrels per remains solid with the industry expected to grow demand least until total chemical demand recovers to pre-pandemic day, while demand was running at 10 million barrels per day by more than 35% to 480 million tons by 2030. levels. The chemical industry is under increasing pressure below original estimates. More than half of the recently to act on climate change and circularity by recycling plastics new-built modern refining capacity is located in China. and chemicals. Through alliances and a strong push in R&D, Older and less efficient processing units, most exposed to the industry is cooperating along the supply chain to address shutdowns, are mainly located in mature markets. In 2020, global plastics waste. refinery closures were announced in North America, Europe and OECD Asia.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our business environment 26
Vegoils & biofuels Competition During 2020, we continued to see steady growth in demand Capital from long-term financial investors like infrastructure for vegoils, driven in part by increased use of vegoils in funds continues to flow into the storage market, encouraged biofuels. Meanwhile, demand continues to grow steadily by low borrowing costs. in key end-markets, such as food and personal care. Lower supply of vegoils, mainly from Latin America, put upward Many oil storage terminals in key hubs and secondary pressure on prices. Even so, exports and trade of vegoils locations have increased occupancy levels supported by the remained steady in 2020. favorable oil market structure during 2020. At the same time, the chemical storage market witnessed lower throughputs New energies and higher-than-usual stock levels in most regions as the In recent years, we have seen a sharp rise in consumption of pandemic spread across the globe suppressing demand for renewables, like wind and solar power. According to the IEA, durable goods. renewables are forecast to grow significantly over the next five years. In the short term, however, it is likely that the Gas continues to fulfill its role as a sustainable transition fuel world will remain dependent on traditional fossil fuels. and feedstock, with gas storage providers benefitting from Currently, only 4% of energy for transport, for example, this momentum as seaborne gas trade (LNG & LPG) is comes from renewables. growing across the globe.
Many industries cannot yet rely on renewable electricity to generate high-temperature heat. More work is also needed on battery technology to store renewable energy and smooth out fluctuations in supply and demand.
Vopak Annual Report 2020 Our business Our business
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our business 27 Our business As an independent service provider, We ensure safe, clean and efficient storage and handling of bulk liquid products and gases Vopak never owns the for our customers. By doing so, we enable the delivery of products that are vital to the products that it stores economy and the daily lives of people across the globe. for its customers
Vopak and its predecessors have been serving customers Products we store for more than 400 years. We know how to adapt to changing We store and handle a variety of liquid or liquefied products. times and identify opportunities in a world transforming These include: faster than ever. We are building an organization that reflects • Chemicals (methanol, xylenes, styrene, alpha olefins, smart insights from innovation and digitization. isocyanates, MEG) • Gas (LNG, LPG, ethylene, butadiene, ammonia) Our business is organized into five divisions: Americas, • Oil products (crude oil, fuel oil, diesel, jet fuel, Asia & Middle East, China & North Asia, Europe & Africa gasoline, naphtha) and LNG. Vopak is headquartered in Rotterdam, and listed • Vegoils and biofuels. on Euronext Amsterdam. As an independent service provider, Vopak never owns the products that it stores for its customers.
p o oa
oa
o a o
op a a a a a o a
p a o pa
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our business 28
Our business specifications. In all processes, we follow strict rules contracts for gas last 5-20 years. Chemicals and oil storage We operate storage terminals at seaports around the world; that stress the importance of safety and protecting the contracts tend to be shorter term, with tenure of 0-5 years. these terminals comprise storage tanks, jetties, truck environment. On request, products are pumped from In 2020, over 49% of our revenue came from contracts with loading stations and pipelines, and provide access to road, storage tanks to our customers. Our aim is to transit an original contract duration of three years or more. rail and pipeline networks. In many instances, we store products as quickly and efficiently as possible, helping our customers’ products for extended periods at these connect supply and demand and ensuring delivery of Our suppliers terminals. Vopak provides common storage and logistics vital products to society. Our suppliers vary from global vendors, used for equipment services to customers. Consequently, our customers are and IT automation, to local service and construction able to benefit from economies of scale; they do not Our customers suppliers. We aim for long-term partnerships and to ensure have the direct cost of owning and maintaining complex Our customers are producers, manufacturers, distributors, continuous improvement on quality, efficiency and safety. infrastructure. By optimizing storage and handling processes governments and traders. They include leading international, In line with our Sustainability Policy and Vopak’s Code of and operating more efficiently, we save our customers regional and national chemical, oil and gas companies. Most Conduct, we require our suppliers, contractors (and their time and money, and allow them to concentrate on their of our customers have been with us for several decades. sub-tier suppliers and contractors) to adhere to our core business. Vopak’s terminals connect directly with national grids and Supplier Code. distribution networks. In many cases, we handle feedstock At our terminals, we take bulk delivery of products: oils, (products used in industrial processes); in others, products Vopak’s role in different value chains gases and chemicals. These products are unloaded into our go directly to end-users. More than 80% of our revenue We provide storage and handling services to serve three storage tanks. During storage, we maintain product quality, comes from take-or-pay storage fees paid by customers. principal end markets: energy, manufacturing and food often under tightly controlled conditions – in some cases, Vopak’s ambition is to be a strong link in customers’ supply & agriculture. Our terminals play a key role supplying we heat or blend products together, according to customer chains. Much of our business is long-term: typically, products to people and communities around the world.
Vopak’s role in different value chains
New energy Gas Industrial Chemical Oil & feedstocks terminals terminals terminals terminals
LPG LNG
End markets
Energy Manufacturing Food & agriculture
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our business 29
Americas Asia & Middle East China & North Asia Europe & Africa LNG Canada: RIPET, Hamilton, Montreal India: Kandla China: Caojing (Shanghai), Haiteng, Belgium: ACS (Antwerp), Eurotank Colombia: SPEC LNG East, Montreal West, Quebec City Indonesia: Jakarta, Merak Ningbo, Shandong Lanshan, (Antwerp), Linkeroever (Antwerp) Mexico: LNG Terminal Altamira US: Deer Park (Houston), Freeport, Australia: Darwin, Sydney Tianjin Lingang, Zhangjiagang Spain: Terquimsa Barcelona, Netherlands: Gate terminal Plaquemine, St. Charles, Long Beach, Malaysia: Kertih, PITSB, PT2SB South Korea: Vopak Terminal Korea Terquimsa Tarragona (Rotterdam) Los Angeles, Savannah Singapore: Banyan, Penjuru, Sakra, Vietnam: Vopak Vietnam Netherlands: Maasvlakte Oil Terminal Pakistan: Engro Elengy Terminal Brazil: União Vopak, Alemoa, Aratu Sebarok, Jurong Rock Caverns (Rotterdam), Botlek (Rotterdam), Colombia: Barranquilla, Cartagena Thailand: Thai Tank Terminal Chemiehaven (Rotterdam), Mexico: Altamira, Coatzacoalcos, Saudi Arabia: Chemtank, SabTank – Eemshaven, Europoort (Rotterdam), Veracruz Al Jubail, Sab Tank – Yanbu Laurenshaven (Rotterdam), TTR Panama: Bahia Las Minas, Pakistan: Engro Vopak Terminal (Rotterdam), Vlaardingen, Vlissingen Vopak Panama UAE: Vopak Horizon Fujairah South Africa: Durban, Lesedi
Number of terminals: 22 Number of terminals: 19 Number of terminals: 8 Number of terminals: 16 Number of terminals: 4 Storage capacity: 5.3 million cbm Storage capacity: 15.5 million cbm Storage capacity: 2.8 million cbm Storage capacity: 10.7 million cbm Storage capacity: 1.2 million cbm
• Hub terminal • Terminal
Note 1: Map shows Vopak terminals in operation at 16 February 2021. Note 2: Our terminal in Venezuela is formally part of the Global functions and is not part of any of the divisions.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Gender diversity Caring for all and inclusion stakeholders supporting our during the value agenda pandemic
Female operators in Our local heroes South Africa storing during challenging times vital products with care
Vopak constructed a new terminal near Johannesburg that Despite the Covid-19 pandemic all our terminals worldwide has a crucial role in the fuel supply. It is not only the strategic were operational in 2020. Our frontline colleagues quickly location of Vopak Lesedi terminal that makes it noteworthy but adapted to the situation and continued caring for products also the high percentage of women working in our operations. essential to society.
More than 50% of the operators are women, mainly from the local community. Colleagues have been taking extra precautions globally building on Vopak’s They take care of the safe receipt of the fuel from the pipeline into the terminal and safety culture. This is fulfilled by strictly following guidance from local governments the efficient and safe loading of the trucks that will transfer the fuel to Johannesburg. and adapting work methods in order to continue to operate safely.
Vopak Annual Report 2020 Performance & Outlook Performance & Outlook
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
32 Our performance 44 People leadership 33 Financial performance 48 Key developments by division 48 Americas 36 Leading assets in leading locations 49 Asia & Middle East 50 China & North Asia 38 Operational leadership 51 Europe & Africa 52 LNG 40 Service leadership 53 Outlook 42 Technology leadership
Performance & outlook
Vopak Annual Report 2020 Our performance Our performance
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Our performance 32 Our performance
Key performance figures
2020 2019 2020 2019 Safety performance Key figures per ordinary share (in EUR) Total Injury Rates (TIR), own employees and contractors Basic earnings 2.38 4.47 (per 200,000 hours worked) 0.37 0.34 Basic earnings -excluding exceptional items- 2.42 2.80 Lost-time Injury Rate (LTIR), own employees and contractors Diluted earnings 2.38 4.47 (per 200,000 hours worked) 0.17 0.18 Diluted earnings -excluding exceptional items- 2.41 2.80 Process Safety Events Rate (PSER), own employees and contractors (per 200,000 hours worked) 0.14 0.16 (Proposed) dividend 1.20 1. 15 Total number of shares outstanding 125,740,586 127,835,430 Financial performance (in EUR millions) Revenues 1,190.0 1,252.6 Business performance Group operating profit before depreciation and amortization (EBITDA) 789.4 1,038.5 Storage capacity end of period (in million cbm) 35.6 34.4 Group operating profit before depreciation and amortization (EBITDA) - subsidiaries 18.2 18.2 -excluding exceptional items- 791.5 829.8 - joint ventures and associates 13.5 12.3 Group operating profit EBIT 489.9 747.8 - operatorships 3.9 3.9 Group operating profit EBIT -excluding exceptional items- 492.0 539.1 Occupancy rate subsidiaries (average rented storage capacity) 88% 84% Net profit attributable to holders of ordinary shares 300.9 571.0 Total number of employees end of period (in FTE) 5,637 5,559 Net profit attributable to holders of ordinary shares -excluding Contracts > 3 years (as % of revenues) 49% 44% exceptional items- 305.8 357.8 Contracts > 1 year (as % of revenues) 91% 80% Cash flows from operating activities (gross) 822.2 709.7 Cash flows from investing activities (including derivatives) - 584.5 - 256.1 Information on a proportional basis Group operating profit before depreciation and amortization (EBITDA) Average capital employed 4,164.5 4,247.3 -excluding exceptional items- 972.3 980.7 Return on capital employed (ROCE) 11.6% 12.4% Occupancy rate subsidiaries, joint ventures and associates 90% 84% Return on equity (ROE) 10.1% 12.5% Net interest-bearing debt 3,620.5 3,280.2 EBITDA margin excluding result joint ventures and associates 51.4% 50.8% Sustaining, service improvement and IT capex 329.2 321.7 Capital and financing (in EUR millions) Environmental performance Equity attributable to owners of parent 2,980.7 3,047.3 Societal impact reduction of our VOC emissions 19% 6% Total interest-bearing debt 2,589.4 2,335.3 Total amount of uncontained spills (metric tons) 327 21 Senior net debt : EBITDA 2.52 2.75 - Soil & groundwater (metric tons) 301 19 Total net debt : EBITDA 2.75 2.75 - Water (metric tons) 26 2 Interest cover (EBITDA : net finance costs) 10.9 10.4 Total carbon emissions (kilotons – scopes 1 and 2)1 441.2 408.5
Business ethics & integrity Fines for permit violations (amount, EUR million) 0 0 1 scope 1 relates to direct emissions (from sources owned or controlled by Vopak), Employees completed the Code of Conduct training (in %) >88% >90% scope 2 relates to indirect emissions (from generation of purchased energy).
Vopak Annual Report 2020 Financial performance Financial performance
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Financial performance 33 Financial performance
Operating results An exceptional gain of EUR 0.7 million was recognized in 2020 Result joint ventures and associates Revenues (2019: exceptional loss of EUR 1.0 million). This was mainly In 2020, the result of joint ventures and associates -excluding During 2020, Vopak generated revenues of EUR1,190.0 million, the result of a reversal of a provision recorded because of exceptional items- amounted to EUR 166.0 million, a decrease compared to EUR 1,252.6 million in 2019. Excluding the uncertainty that was resolved with respect to renewal of an of EUR 10.5 million (-6%) compared to EUR 176.5 million in negative currency translation effect of EUR 29.4 million, the expiring land lease contract for our terminal in Quebec City in 2019. The currency translation effect had a downward effect decrease amounted to EUR 33.2 million (-3%). Higher revenues Canada. Including exceptional items, total personnel expenses of EUR 2.4 million. In 2019, the result of joint ventures included were generated by the additional capacity rented out due to for 2020 amounted to EUR 331.2 million compared to a positive impact of customer settlements at Vopak Terminal contango oil markets and IMO 2020 converted capacity EUR 347.0 million in 2019. Haiteng that was not present in 2020. In the fourth quarter whereas divestments of the terminals in Algeciras, Amsterdam of 2020, our associate industrial terminal (PT2SB) in Malaysia and Hamburg lowered revenues by EUR 99.1 million. Other operating expenses recognized an accounting loss of EUR 19.8 million (Vopak Operating expenses -excluding exceptional items- decreased share), partly in connection with prior year. This was related The average occupancy rate for Vopak’s subsidiaries by EUR 27.1 million (-10%) to EUR 259.6 million (2019: to this terminal being fully commissioned, and settlement of (i.e. excluding joint ventures and associates) in 2020 was 88% EUR 286.7 million). Excluding the positive currency various customer contract discussions. As well as finalizing compared to 84% in 2019. The increase is largely caused by translation effect of EUR 5.6 million, the decrease amounted the accounting of several specific non-cash items related to contango developments in the oil markets, whereas storage to EUR 21.5 million. This decrease was, for an amount of depreciation charges on fixed assets and deferred tax liabilities demand in other market segments remained solid. EUR 24.3 million, caused by the divestments of the in connection with the complex tax environment. The associate terminals in Algeciras, Amsterdam and Hamburg whereas industrial terminal PT2SB in Malaysia, is expected to repay Vopak’s worldwide storage capacity increased with 1.2 million expenses related to new capacity, business development around EUR 50 million (Vopak share) of share capital cbm from 34.4 million cbm per the end of 2019 to 35.6 million projects and IT projects increased. repayments, in 2021 or 2022. cbm per the end of 2020, reflecting divestments of 0.4 million cbm and newly commissioned capacity of 1.6 million cbm. In 2020 an exceptional item of EUR 1.7 million was recorded In 2020, an exceptional loss of EUR 4.8 million (2019: loss of (2019: EUR 1.5 million) related to the divestment of Algeciras EUR 14.7 million) was recognized in the result of joint ventures Expenses which was completed in January 2020. Furthermore, in and associates relating to the transaction costs for the Personnel expenses December 2020, an exceptional gain of EUR 0.8 million was acquisition of the Dow terminals in the Americas. In 2020, personnel expenses -excluding exceptional items- recognized in relation to the partial reversal of an environmental amounted to EUR 331.9 million, a decrease of EUR 14.1 million provision for our terminal in Quebec City in Canada as a result The Group’s result of joint ventures and associates -including (-4%) compared to EUR 346.0 million in 2019. Excluding the of the uncertainty with respect to renewal of the land lease exceptional items- for 2020 amounted to EUR 161.2 million positive currency translation effect of EUR 6.2 million, the contract that was resolved during the year. compared to EUR 161.8 million in 2019. decrease amounted to EUR 7.9 million. This decrease can be largely attributed to the downward effects of the divestments, Including exceptional items, total other operating expenses Group operating profit before depreciation and while regular annual merit increases partly offset this effect. in 2020 amounted to EUR 260.5 million compared to amortization EUR 288.2 million in 2019. Group operating profit before depreciation and amortization During 2020, Vopak employed, in FTEs, an average of (EBITDA) -excluding exceptional items- and including 4,355 employees (2019: 4,345), excluding joint ventures and Cost efficiency measures were delivered, the total cost level for the net result of joint ventures and associates, decreased associates. This comprises 3,758 own employees (2019: 3,768) 2020 amounted to EUR 591 million, below the revised target of by EUR 38.3 million (-5%) to EUR 791.5 million and 597 temporary employees (2019: 577). EUR 600 million and the 2019 cost base of EUR 633 million. (2019: EUR 829.8 million).
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Financial performance 34
Excluding the negative currency translation effect of Strategic investments and divestments Divestments and repayments EUR 20.6 million, the decrease amounted to EUR 17.7 million. Cash flows from investing activities Total cash inflows from disposals and repayments in 2020 Adjusted for the effect of the divestments of the terminals Total cash flows from investing activities (including derivatives) amounted to EUR 256.8 million (2019: EUR 560.9 million). in Algeciras, Amsterdam and Hamburg (EUR 58.0 million for 2020 amounted to a net cash outflow of EUR 584.5 million In January 2020, the associate industrial terminal PT2SB in decrease), EBITDA increased by EUR 40.3 million, reflecting (2019: net cash outflow of EUR 256.1 million). Cash outflows Malaysia repaid part of its preference share capital following resilient business performance including the effects of newly for total investments increased with EUR 37.3 million reflecting the completion of financing arrangements resulting in a cash commissioned capacity, contango oil markets, IMO 2020 continued capital allocation to growth. Cash inflows from inflow of EUR 85 million for Vopak. On 31 January 2020, Vopak converted capacity and reduced chemicals throughput. proceeds of disposals and repayments decreased with completed the earlier announced divestment of its 100% EUR 304.1 million compared to 2019, mainly in relation shareholding in the terminal in Algeciras, Spain, generating Including exceptional items, Group operating profit before to the divestments of 2019. a cash inflow of EUR 135 million. In 2020, the remaining depreciation and amortization (EBITDA) for 2020 amounted to consideration of EUR 33 million was received in relation to EUR 789.4 million compared to EUR 1,038.5 million in 2019. Total investments amounted to EUR 844.0 million (2019: the divestment of its 49% equity share in the joint venture The exceptional items for 2020 also includes EUR 33.0 million EUR 806.7 million), of which EUR 612.5 million was invested Vopak SDIC Yangpu Terminal in Hainan, China. relating to the 2019 divestment of the 49% equity share in the in property, plant and equipment (2019: EUR 589.7 million). joint venture Vopak SDIC Yangpu Terminal in Hainan, which is Investments in joint ventures, associates and other equity Depreciation and amortization recognized as Other operating income. investments, including acquisitions, amounted to Depreciation and amortization charges amounted to EUR 189.7 million (2019: EUR 180.4 million). EUR 299.5 million, which was EUR 8.8 million (3%) higher Group operating profit than prior year (2019: EUR 290.7 million). Excluding the positive Group operating profit (EBIT) -excluding exceptional items- Vopak continued to invest in growth of its global terminal currency translation effect of EUR 5.8 million, the increase amounted to EUR 492.0 million; a decrease of EUR 47.1 million portfolio and invested EUR 525.3 million in the expansion amounted to EUR 14.6 million. Lower depreciation and (-9%) compared to EUR 539.1 million in the same period of existing terminals and the construction of new terminals amortization charges due to the divestments of the terminals in of 2019. Excluding the negative currency translation effect in among others South Africa, the US and China in 2020 Algeciras, Amsterdam and Hamburg (EUR 9.7 million decrease) of EUR 14.8 million and the effect of the divestments of (2019: EUR 499.8 million). The impact of governmental were more than offset by higher depreciation and amortization EUR 48.3 million, the increase amounted to EUR 16.0 million. restrictions related to Covid-19 resulted in construction delays charges from completed projects. for some developments, most noticeably South African Including exceptional items, Group operating profit (EBIT) projects Lesedi and Durban, which were already delayed. Impairments for 2020 amounted to EUR 489.9 million compared to In 2020, net impairments were recognized for the amount of EUR 747.8 million in 2019. For the period 2020-2022,Vopak indicated to spend EUR 30.1 million (2019: EUR 17.2 million). In the fourth quarter EUR 750 million to EUR 850 million for sustaining and service an impairment was recognized for the Vopak Bahia las Minas ROCE -excluding exceptional items- of 11.6% compared improvement capex, subject to additional discretionary terminal in Panama for an amount of EUR 42.9 million. The to 12.4% in 2019. decisions, policy changes and regulatory environment. The impairment is primarily related to the business environment sustaining and service improvement capex for 2020 amounted in which the terminal currently operates. Slow progress with Cash flows from operating activities and working to EUR 271.1 million (2019: EUR 262.1 million). offshore bunkering opportunities is limiting the demand and capital the growth potential of the Atlantic bunker market in Panama. Cash flows from operating activities (gross) amounted to As part of the strategic direction for the period 2020-2022, EUR 822.2 million in 2020 (2019: EUR 709.7 million). This Vopak indicated to invest annually EUR 30 million to In 2019, the Quebec City terminal in Canada was fully increase of EUR 112.5 million was mainly related to net EUR 50 million in IT capex to complete Vopak’s digital terminal impaired due to uncertainty with respect to renewal of the cash inflows from non-hedging derivatives positions held for management system. In 2020, EUR 44.0 million was invested land lease contract. In 2020, this impairment has been fully intra-group financing positions as well as higher dividends in new technology, innovation programs and IT projects reversed which, offset by depreciation of expenses, resulted received from joint ventures and associates. (2019: EUR 37.6 million). in an exceptional gain of EUR 12.8 million in 2020.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Financial performance 35
This reversal was the result of positive and ongoing discussions EUR 87.5 million in 2019. The decrease in the interest Net profit attributable to holders with the local authorities. on interest-bearing loans of EUR 16.3 million is mainly in of ordinary shares connection with lower average net-debt compared to prior year Net profit attributable to holders of ordinary shares -excluding Capital structure and was to a large extent offset by lower capitalized interest exceptional items- amounted to EUR 305.8 million, a decrease Equity of EUR 9.5 million caused by commissioning of expansion of EUR 52.0 million (-15%) compared to EUR 357.8 million in The equity attributable to holders of ordinary shares decreased projects at subsidiaries during the year. 2019. Earnings per ordinary share -excluding exceptional items- by EUR 66.6 million to EUR 2,980.7 million (31 December amounted to EUR 2.42 in 2020, which was 14% lower 2019: EUR 3,047.3 million). The decrease mainly resulted The average interest rate over the reporting period was 3.7% compared to EUR 2.80 in 2019. from the ordinary shareholder dividend payments in cash of (2019 4.1%). The fixed-to-floating ratio of the long-term EUR 146.1 million, as well as the impact of the share buyback interest-bearing loans, including interest rate swaps, amounted Net profit attributable to holders of ordinary shares -including and purchases of treasury shares of EUR 108.1 million and to 83% versus 17% at year-end 2020, compared to 85% exceptional items- amounted to EUR 300.9 million compared the other comprehensive income of EUR 120.5 million. versus 15% in the prior year. to EUR 571.0 million in 2019. Earnings per ordinary share This decrease was partly compensated by the addition -including exceptional items- amounted to EUR 2.38 of the net profit for the period of EUR 300.9 million. Cash flows from financing activities (2019: EUR 4.47). The cash outflow from financing activities amounted to Debt EUR 218.7 million (2019: outflow of EUR 355.3 million). Joint ventures and associates The total interest-bearing debt increased with EUR 254.1 million This amount consisted mainly of dividend payments of Joint ventures and associates are an important part of the to EUR 2,589.4 million (31 December 2019: EUR 2,335.3 EUR 146.1 million to ordinary shareholders, dividend payments Group for which equity accounting is applied. The effects million), to a large extent reflecting increased lease liabilities of EUR 24.6 million to non-controlling interests, repurchases of non-IFRS proportional consolidation on the statement as a result of new extensions of long-term land lease contracts. of own shares of EUR 108.1 million, finance costs payments of financial position and statement of income of the Group of EUR 94.0 million and lease payments of EUR 26.7 million. are presented in the section Additional information. Net repayments of interest-bearing loans and short-term Net proceeds from interest-bearing loans and short-term borrowings during 2020 amounted to EUR 207.0 million financing were EUR 207.0 million (2019: payments of Dividend proposal (2019: EUR 38.6 million). The Revolving Credit Facility was fully EUR 38.6 million). Vopak’s dividend policy targets to pay an annual stable to rising available for the total amount of EUR 1.0 billion as at year-end cash dividend in balance with a management view on a payout 2020 (2019: EUR 100 million utilized). Income taxes ratio range of 25-75% of the net profit excluding exceptional Income tax expenses -excluding exceptional items- amounted items attributable to holders of ordinary shares and subject As at 31 December 2020, an equivalent of EUR 1,606.2 million to EUR 70.3 million in 2020, an increase of EUR 9.3 million to market circumstances. The net profit excluding exceptional (2019: EUR 1,467.2 million) was drawn under private placement (15%) compared to EUR 61.0 million in 2019. The effective tax items that forms the basis for dividends to be declared may be programs with an average remaining term of 6.7 years (2019: rate -excluding exceptional items- was 17.3% compared to adjusted for instance for the financial effects of one-off events, 6.3 years) in addition to EUR 122.9 million (SGD 200 million) 13.5% in 2019. This increase was mainly due to changes in such as changes in accounting policies, acquisitions and funded by banks at the level of Vopak Terminals Singapore, earnings and the applicability of participation exemptions divestments. with an average remaining term of 2.6 years. thereto and differences in corrections for previous years. Vopak proposes a dividend of EUR 1.20 per ordinary share The Senior net debt : EBITDA ratio was 2.52 as at year-end Income tax expenses -including exceptional items- amounted over 2020 (2019: EUR 1.15) to the Annual General Meeting of 2020 (31 December 2019: 2.75), well below the maximum to EUR 73.1 million in 2020, an increase of EUR 14.8 million 21 April 2021. The dividend increase reflects Vopak’s continued agreed ratios in the covenants with the lenders. compared to EUR 58.3 million in 2019. The effective tax rate resilient performance throughout a turbulent 2020. The -including exceptional items- was 18.1% compared to 8.8% dividend payout ratio will amount to 50% of earnings per Net finance costs in 2019. This increase was mainly due to changes in earnings ordinary share excluding exceptional items (2019: 41%). In 2020, the Group’s net finance costs -excluding exceptional and the applicability of participation exemptions thereto and items- amounted to EUR 86.3 million, which is in line with differences in corrections for previous years.
Vopak Annual Report 2020 Leading assets in leading locations Leading assets in leading locations
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Leading assets in leading locations 36 Leading assets in leading locations
In line with our strategy, we are continuing to shift more capacity to East of Suez and to the Americas, and to seize new opportunities for growth, particularly in industrial and gas terminals. Furthermore, we are pursuing growth opportunities in new energies.
Factors driving leading assets in leading In LNG, we are focusing on increasing capacity utilization locations: by adding customers and new services to existing and • Growing Asian and non-OECD economies, led by China recently acquired LNG terminals. and India, pushing up demand in these countries for the • In industrial terminals, we together with our partner have products we handle acquired three terminals from Dow, totaling 852,000 cbm • Continued demand for infrastructure to accommodate of additional capacity on the US Gulf Coast. In addition, increased levels of international trade between supply Vopak signed an LOI with Chandra Asri Petrochemical points and consuming centers to collaborate in the industrial infrastructure business in • Rising concerns over climate change and opportunities Indonesia. At the same time, our pipeline of projects is for accelerating demand for cleaner forms of energy and well filled and reflecting the strategic direction to increase new, more sustainable business models. industrial growth opportunities in the global network. • In chemicals hubs and distribution terminals, we launched Increasing storage capacity two expansion projects in the Americas with an additional During 2020, we During 2020, we successfully added 1.6 million cbm of 20,000 cbm at Alemoa, Brazil, and another 40,000 cbm successfully added new capacity to our global terminal portfolio. Covid-19 at Altamira, Mexico, as well as two service improvement 1.6 million cbm of new resulted in some project delays because of lockdown projects in the Netherlands, at our Vlaardingen and restrictions – most notably in South Africa; however, the Botlek terminals. capacity to our global overall value of our growth projects was not affected. • In oil, we strengthened our hub positions by adding terminal portfolio • In gas, we completed a 9,200 cbm expansion at our capacity at Pengerang, Malaysia, and expanding capacity Vlissingen terminal in the Netherlands. We are currently at our terminal in Panama. In fuels distribution, we working on a 65,000 cbm chemical gas expansion at our successfully commissioned a new terminal in Lesedi, Shanghai Caojing terminal in China, and are investing in our South Africa, and added capacity at our existing terminal joint venture terminal Vopak Moda Houston in the US, which in Durban, South Africa, and in Jakarta, Indonesia, will add another 46,000 cbm in chemical gas storage. reflecting our continued focus on oil-deficit countries.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Leading assets in leading locations 37
New Energies & Vopak Ventures • Strengthening our position at chemicals hubs by opo o a p o a o In the years ahead, sustainable energy demand will increase, connecting to industrial customers and expanding especially as governments and consumers in some parts of chemicals distribution capacity in short markets. 0 0 0 the world shift away from fossil fuels. For Vopak, there are • Further strengthening our position in the main key hub 20 2 clear opportunities in this area. We remain committed to our locations by adapting our terminals to enhance customer 2 0 2 0 new energy strategy and set up Vopak Ventures to identify value and increase connectivity. In distribution locations, 0 2 0 investment opportunities in start-ups and new technologies. we will look for growth in oil-deficit countries and monitor 2 0 2 0 Currently, Vopak Ventures has four investments focused on our position in mature markets to identify the need to facilitating new sustainable solutions in areas including zero adjust the portfolio. 0 0 0 emission fuels (such as hydrogen) and green feedstocks • Investigating possible growth in new energies, with a
for the industrial and recycling sectors. Vopak Ventures has focus on four areas: hydrogen, storage of CO2, flow 20 20 20 2020 another five investments focused on digitalization to improve batteries, and new feedstocks for the chemicals industry. Gas terminals Chemicals terminals customer service making our operations and our industry Industrial terminals Oil terminals safer as well as more efficient and effective. With this strategy we will continue to shift our portfolio. We aim to allocate the majority of our growth investments Looking ahead to industrial, gas and new energies infrastructures. Our opo o a o The Covid-19 pandemic and its knock-on effects are positive views on chemicals have not changed. New growth
expected to have a lasting impact although long-term trends investments in oil infrastructure are expected to be reduced 0 0 0 0 driving Vopak’s business remain valid. For the coming years, and will mostly be targeted towards strengthening our 20 20 we have a growth strategy that will focus on: leading hub positions. 20 20 20 2 • Expanding our portfolio of gas terminals, adding new 2 0 2 capacity, as well as strengthening and expanding existing In 2020, we invested more than EUR 500 million in growth 0 0 sites. For LNG, our emphasis remains on regasification investments, in line with our ambitions. For 2021, we have 0 terminals, developing both off-shore FSRU projects and the ambition to allocate EUR 300 million to EUR 350 million 0 0 land-based sites. For LPG, we will concentrate on light to growth investments through existing committed projects, 0 feedstock for PDH plants and crackers, while for energy new business development and pre-FID feasibility studies 20 20 20 2020 related use, the focus will be on imports for residential in new energies including hydrogen. LNG Asia & Middle East Europa & Africa short markets. We will also pursue export oriented Americas China & North Asia terminal projects in growing LPG surplus markets. Our expansion in industrial terminals will depend on • Expanding our industrial terminal footprint through adding customers’ own investments in integrated chemicals plants. new capacity to support crackers and integrated projects in Asia, the Middle East and US Gulf Coast. In addition, we will explore further opportunities in industrial terminal carve-outs which have potential in more mature markets such as Europe and the Americas.
Vopak Annual Report 2020 Operational leadership Operational leadership
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Operational leadership 38 Operational leadership
In 2020, we continued to invest in improving our safety, health, environmental and operational performance. We have an extensive sustaining and service capex program in place to maintain the integrity of our assets, comply with new legislation and improve customer service.
Factors driving operational leadership: o a a • Commitment to safety n e plo ee an ontra tor per 200 000 our or e • Commitment to sustainability 0 • Performance improvement for greater efficiency and service in our operations • Designing the right terminals for the future and delivering 0 projects according to plan
• Effective asset management 0 2
Commitment to safety Fortunately, we did not experience any fatalities or major 20 20 20 20 20 20 2020 injuries leading to the permanent disability of any employees Total Injury Rate 3-year rolling average TIR or contractors in 2020. This is in line with our targets of zero fatalities and zero serious injuries. There was an increase in the total injury rate for our employees and contractors – o a a from 0.34 to 0.37. These were minor injuries, without n e plo ee an ontra tor per 200 000 our or e We did not permanent consequences for the individuals involved. 0 0 On process safety, we managed to reduce the process experience any safety event rate from 0.16 to 0.14. 0 0 major injuries or 0 20 incidents in 2020 Our aim is to bring our TIR three-year rolling average down to a maximum of 0.20, and our PSER to a maximum of 0.16 by 2024. 0 0
In 2020, we continued to roll-out our Trust & Verify Program. 20 20 20 20 20 20 2020 This roll-out is expected to be complete by 2021. Trust Process Safety Event Rate & Verify is based on two very straightforward questions: “Am I in control?” and “How do I know that I am?”. By answering these questions, our aim is to strengthen personal accountability for safety issues.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Operational leadership 39
Trust & Verify covers all employees – from operators to We also work to avoid spills; our goal is for zero uncontained Effective asset management members of the Vopak Executive Board. We regard safety spills. In 2020, uncontained spills amounted to 327 metric We carry out regular maintenance of our terminals and as our first priority – it is also a key component in our social tons, mainly due to a spill that occurred in Singapore towards other facilities to ensure continued efficiency. Maintenance license to operate. the end of the year. All reportable spills were remediated can be needed to correct existing operational problems, or immediately according to the Vopak Way standards to prevent new problems from developing. Our maintenance Alongside Trust & Verify, we have extensive training staff receive regular training and instruction to enhance their programs. In 2020, Vopak employees spent an average For more detailed information on our sustainability skills and further improve efficiency. 36 hours in training compared to 50 hours in 2019. This performance, we refer to the Sustainability section reduction is largerly due to Covid-19 limitations. We have of this report. During 2020, we launched our Maintenance Improvement incorporated safety into internal policies and guidelines, Project (MIP), to update our processes, enhance system including our Code of Conduct – it is an important part of Performance improvement for greater support and add new functionalities to improve effectiveness our Learning Management System. Through our Assure efficiency and service in our operations and efficiency. MIP is currently being piloted at our and Terminal Health Assessment (THA) audit programs, We strive to continuously improve our operational Vlaardingen and Sebarok terminals. we validate our terminals are being safely operated. performance by improving the service delivery to our customers and the efficiency of our operations. In 2020, Of all our facilities, tanks require the most maintenance – Various innovations and technologies are piloted and we have implemented our new terminal management consequently, in 2020, we started a Tank Turnaround implemented to improve safety but also efficiency and service. system ‘MyService’ at 14 terminals and will continue to Excellence program at four terminals in our key hub locations Amongst others artificial intelligence, robotic tank cleaning implement it at other terminals in the coming years. The to increase efficiency and effectiveness during execution. and drone inspections are used to reduce safety risks. system enables our terminals to improve process efficiency, realtime working and performance management using a Commitment to sustainability set of performance dashboards. Through innovative digital po a p po a p We aim to keep our VOC emissions to a minimum to protect solutions we aim to further excel for instance in the area total nu er etr ton the health of both employees and communities living close of energy efficiency. First results have been delivered. 0 200 to our facilities. We are currently investing EUR 40 million to reduce VOC emissions, focusing on those areas where Designing the right terminals for the future 0 0 we have the highest social impact. and delivering projects according to plan Conceptual design of new terminals and terminal expansions 20 00 In 2020, 55 projects are completed at 17 locations, resulting is executed at a centralised level to create maximum 2 0 0 in a societal impact reduction of 19% compared to 2016. synergies. During 2020, the Global Engineering group 2 We also work to limit CO2 emissions from our facilities by delivered 35 engineering packages, worked on new energy 2 2 reducing energy consumption and switching to renewables. projects and professionalised the estimating capabilities. 20 20 20 20 2020 20 20 20 2020 In 2020, our scope 1 and 2 greenhouse gas emissions To soil and groundwater (uncontained) To water (uncontained) To soil and groundwater (uncontained) To water (uncontained) totaled 444,150 metric tons, up 9% from 2019 due to Early 2020 the new project control standard was the changes in the portfolio. Our ambition is to be climate implemented, with improved reporting standards and team neutral by 2050. quality. During 2020 many new projects were commissioned across the globe.
Vopak Annual Report 2020 Service leadership Service leadership
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Service leadership 40 Service leadership We invest to increase availability In recent years, there has been a steady increase in our Net Promoter Score (NPS) that of real-time data improved again in 2020. With new digital technologies, we have an opportunity to further for our customers improve customer service and make supply chains safer and more efficient.
Factors driving service leadership: Enhanced service through connectivity • Increased availability of real-time data, fueled by the We invest constantly to improve customer service. Our aim advance in new digital technologies is always to be best in port in terms of safety, sustainability, • Demand among customers for higher standards of operational and service delivery. We improve our service service and efficiency, as well as for more sustainable along three lines of action: processes and business practices • Using digital technology and real-time data to optimize • Heightened competition in some markets, due partly supply chains to an influx of new capital from financial investors • Upgrading our terminals and other facilities to optimize • Customers increasingly tendering out gas and industrial operational capabilities and efficiency terminal projects. • Continuously improving processes and integrating lessons learned from customer complaints. Despite Covid-19, we have been able to continue servicing our customers globally. Across all divisions and operating In 2020, we continued the roll-out of our MOVES program, companies we have robust business continuity plans in and have now implemented MyService – our new terminal place that were activated on the outbreak of the pandemic, management system – at 14 terminals. With this new including the formation of crisis management teams across system, we will enable real-time data sharing and the organization. The initial and primary focus was to ensure connectivity to better service our customers and optimize the safety and health of our people and the continuation of our operational process. We have developed our own services to our customers. Measures taken varied by software for our two most critical processes – ‘order to cash’ country, were catered to the local situation, applicable laws and ‘arrival to departure’. This gives us control where we and regulations, and were reviewed regularly. need it most, where customers typically demand flexibility and service differentiation. We have also developed a set of At the start of 2020, we started up the capacity converted performance dashboards to support terminal management for IMO2020 compliant fuel oil in Rotterdam, Singapore and in optimizing terminal operations and service. In the coming Fujairah. With investments of EUR 40 million, we are now years, MyService will be implemented at other terminals able to meet the new storage requirements and are as well. successfully servicing customers active in the low sulfur fuel oil market. Panama is still a developing market for us.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Service leadership 41
At our Deer Park terminal in Houston, we’re using data o o o analytics to reduce demurrage for customers. Our MOVES program supports this by giving employees access to 0 real-time data, and by further integrating operations and sales. With this approach, our customer service teams have 0 access to a real-time overview of planning and logistics. 0 We place strong emphasis on learning from customer complaints and sharing lessons learned across our network 20 of terminals. Data analytics are also becoming more important in analyzing and improving our operational 20 20 20 20 2020 performance. We have started to use the latest communication tools (like Google Currents, Google file sharing) to link terminals across the world. In this way, a p o ap despite time zone differences, we can track service n R ll on performance for individual customers and ensure best 00 practice is implemented across the network. Consistent customer experience 200 and customer loyalty Through regular operational reviews and stewardship 00 meetings, we work closely with our customers to improve our service delivery. Our customers expect high levels of service from Vopak; through our operations, we look to 20 20 20 20 2020 provide a consistent customer experience. Company-wide standards in areas such as safety and sustainability help us achieve this. We use NPS to measure customer loyalty. In 2020, our NPS rose further to 67 points, up from 65 in the previous year; most of this may be attributed to our continuous focus on front-line execution. As part of our NPS surveys, customer responses are carefully followed up and translated into service improvement actions.
Vopak Annual Report 2020 Technology leadership Technology leadership
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Technology leadership 42 Technology leadership New technologies During 2020, we continued the execution of our IT modernization program. New technologies will drive further will drive further improvements in customer service, efficiency and safety. Our investments improvements in service in IT over the past few years allowed us to switch quickly to remote working when Covid-19 and sustainability restrictions came into force.
Factors driving technology leadership: For our two most critical processes – ‘order to cash’ • Continued advance in new technologies and innovation and ‘arrival to departure’ – we have developed our • Increased need to innovate to remain the leading tank own software (PaaS – Platform as a Service). For storage company non-core processes, we are using off-the-shelf solutions • Increased availability and importance of data (SaaS – Software as a Service). • Emergence of new cyber threats and growing importance of cyber security. Asset management platform The key driver behind our approach to digital is the use of In 2020, we introduced new cloud-based finance and real-time data in our operations and customer interactions. procurement systems at 27 of our terminals. At a further This creates both a safer operation and a more efficient 14 terminals, we implemented our terminal management and effective way of working. In 2020, we digitized our asset system MyService. Vopak’s joint venture partners management at our Vlaardingen terminal using a digital twin appreciate our IT solutions for operating our joint terminals. in a newly designed digital environment. By connecting new They increasingly see the value of using our IT solutions as sensors to our legacy valves and pumps, we are able to an additional reason to be part of Vopak’s global network. monitor and manage their behavior in a digital model in real Vopak’s IT strategy is cloud based. In 2020, we successfully time. This should ultimately result in lower maintenance and transferred the on-premise data warehouse to the cloud. inspection costs.
New technologies and innovation At our Europoort terminal in Rotterdam, we have introduced In recent years, we have accelerated our use of new drone inspections, with the aim of saving costs and more digital technologies. Our approach is based on four paths: efficient complying with standards. Using drones, we have modernizing our IT systems; digitizing and connecting access to a more continuous flow of data – the basis for our terminals (MOVES); strengthening cyber security a digital inspection environment that can be linked to our (COINS); and digital innovation and platforms. As part maintenance application. At our Singapore terminals, we of the MOVES program, our old legacy IT system will have also started to use drones for underwater jetty be phased out as from 2022. inspections. These pilots are aimed to be scaled up through the rest of our network.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Technology leadership 43
Supply chain platform Cyber security: our COINS program At Houston, we have finalized a successful pilot with two Increased use of digital technologies requires more focus on n R ll on major customers to exchange real-time data relating to the data security. In 2020, we further strengthened IT security 0 internal processes at our terminal. With our MyService by introducing Privileged Access Management, as well as 0 Terminal Management System, we are able to share relevant segmenting our IT and OT networks – limiting the spread real-time data with clients who, in turn, can use this of a potential cyber attack or mitigating the damage to a 0 information to optimize their planning resulting in cost particular network segment. At the end of 2020, we started 20 savings within their supply chains. In 2021, we will provide implementing our secured Edge Architecture for segmenting other customers in Houston with the same benefits. IT and OT domains. The Edge component, installed at 0 every terminal, will play an important role in achieving our In 2020 Vopak Agencies started its new digital services with data driven ambitions. 20 20 20 2020 a new ‘always-on-board’ offer. This enables Vopak Agencies to deliver services without its employees needing to be physically on board a vessel. Feedback from captains a a o suggests they already recognize the increased efficiency A era e nu er o tra n n our e plo ee ur n ear from this new service. 0 Energy management platform 0 At our Savannah terminal in the US, we introduced sensors, providing real-time data on our energy consumption. Using this data, we managed to reduce our energy costs at 20 Savannah. Based on this success, we are introducing the same approach at Houston and other terminals. Meanwhile, at Europoort, we have initiated a pilot project which aims to 20 20 20 20 2020 use solar foils on tanks to generate clean energy for internal consumption and contribute to our sustainability objectives in lowering our carbon footprint. In addition, we launched a study in Singapore to investigate the potential use of flow batteries in storing and supplying green energy at industrial locations. At the end of 2020, we and our partners in the project, announced that Vopak Solar Park Eemshaven is starting construction of its solar park located in Eemshaven in the province of Groningen. The new solar park will have a capacity of approximately 25 megawatts, with the first green power expected to be supplied to the electricity grid in the third quarter of 2021.
Vopak Annual Report 2020 People leadership People leadership
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
People leadership 44 People leadership
Our first priority has We’re committed to an open and inclusive culture where our people can work safely and been the health of develop their full potential. We believe that each individual has the right to be treated with our people during the respect and dignity, and work in a professional atmosphere that promotes equal opportunities Covid-19 pandemic and prohibits discrimination or harassment on the basis of race, color, national origin, religion, gender, sexual orientation, age, political orientation or trade union membership, allowing everyone at Vopak to develop their full potential.
Factors driving people leadership: • We equipped our terminal operations teams with new • Our response to Covid-19 to protect people working PPE to ensure safety protocols were updated to face the at our terminals threat from Covid-19. Staffing levels at terminals were • Making of a more diverse and inclusive workplace reduced during the pandemic. • Making our company a learning organization • Where necessary, the layout of terminals and offices • Updating our skills to respond effectively to the energy were rearranged and re-equipped to ensure a safe return transition and digital transformation. to work. • Global guidelines for teleworking were implemented, We employ an international workforce of more than 5,600 ensuring proper governance of the new way of working. people in our terminals and office locations. • Support was provided to employees working remotely (including leadership tips, resources to allow home Vopak Values in practice to protect our people office working, team-building exercises, and tokens This year was marked by Covid-19 and our people’s response of appreciation delivered to employees’ houses). to the pandemic. Our first priority has been to protect the • Our expat desk managed to keep all employees and health and well-being of our people, their families, the their families safe – some of them were repatriated communities in which we operate, and to adhere to local internationally to their home countries. government instructions. We’ve made several choices that • Through our We Connect foundation, we provided allowed us to keep our terminals operational and service support to more than 20 initiatives in the communities our customers, using our Vopak Values as guidance: Care where our employees live. for Safety, Health and the Environment, Agility, Team Spirit, Commitment and Integrity:
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
People leadership 45
Diversity and Inclusion Creating a data-driven learning Organization k a Our focus is on increasing diversity in terms of gender, With the implementation of the MOVES program, new A per enta e o o n e plo ee regional origin and competences. Our aim is to increase technologies and further digitalization are being introduced. the percentage of women in senior management positions In future, it’s clear that, across the company, we will need at Vopak to 20% by 2023. new skills, which we will either need to develop internally or else recruit from outside. Technology is changing the way In 2020, we focused on three lines of action: we work – this is as much about culture as a digital change. 2 • We reviewed and modernized our policies and terms of employment. We have implemented more flexible Our MyPulse HR common system allows us to reach all schedules, extended maternity and other parental Vopak employees with e-learning for onboarding or job leaves, introduced telecommuting policies, executed changes, system updates and any other training needs. 20 20 20 20 2020 equal-pay-for-equal-job studies and aligned our variable The system issues reminders, records and reports results pay to attract a more diverse pool of talent. from training, allowing management to follow up and • We set targets by division for recruitment at entry-level, address any areas of weakness or underperformance. talent pipeline, promotions and senior management All e plo ee en or ana e ent positions. Each Vopak business has and follows clear During 2020, we continued to make improvements to MyPulse 17% 16% diversity targets. At the start of the year, 14% of our to include the learning module MyLearningOperations. senior management group were women; by the end of MyPulse also provides employees with easy access to 2020, that had increased to 16%. During the year, several Vopak’s Code of Conduct, Privacy Code, Sanctions management positions were occupied by women for the Compliance, and commercial or performance management first time, including terminal managers and maintenance systems. In 2020, improvements were made with the managers. launch and release of new modules, including the Expense • We continued our work to further increase diversity Reporting, Time and Attendance, Payroll Interfaces, Manager 83% 84% awareness within the company, promote an inclusive and HR Reporting, and Recruitment. MyPulse has helped Men Women Men Women culture and foster more inclusive behavior. We created standardize and simplify our HR processes. HR is using data a new Diversity Advisory Board to create and channel to make organizational decisions and become more efficient. 1 Senior management composition: salary scales at or above 19, practical ideas, find diversity role models who can step excluding Board level. forward and inspire and to promote diversity and inclusion Updating our skills at Vopak. We launched an unconscious bias pilot training Business development efforts in new energies and to improve the awareness of the importance of diversity feedstocks require a new set of competences that we and inclusion. expect to see growing across the organization. In 2020, we decided to create a new global team to pursue opportunities in these segments. The digital transformation within Vopak has also been supported by ongoing re-skilling and onboarding of teams to implement our innovation initiatives, from terminal automation to new systems deployment.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
People leadership 46
Talent attraction & retention Our career website, careersatvopak.com, was updated in Vopak WeConnect Living wage 2020, with European, Asian and Chinese versions. Our Vopak encourages its employees to take an active In line with Vopak’s commitments under the websites not only position us as a dynamic and diverse role in their local communities. Through the Vopak UN Global Compact, Vopak supports the living wage employer, but also help us run an efficient recruitment WeConnect Foundation, employees work on projects principle in the UN’s Declaration on Human Rights. process, extending the use of data and reducing to empower teenagers and young adults, in close The goal of a living wage is to allow a worker to intermediary costs. cooperation with local community groups and/or afford a basic, adequate standard of living through partner organizations. employment without government subsidies. Our In 2020, we also continued our cooperation with the Oxford policy is to pay local Vopak staff at least a living wage. Saïd Business School, implementing our Accelerate 2 Vopak WeConnect has a clear mission: to open up Breaches can be reported by all employees and other Lead program. Our talent development programs, initially new horizons for young people, increase their future external persons. launched in 2019, have been very successful – in 2020, job readiness and inspire them to work with others 70% of the Accelerate 2 Lead graduating class were promoted across cultures, languages and social backgrounds. To ensure our employees’ wages meet (or exceed) to senior jobs. A new class will be launched in 2021. the living wage standards, we carry out annual living Vopak WeConnect projects cover all Vopak divisions wage assessment. In 2020, all countries were found Employee engagement, salaries & benefits with projects running in the US, Latin America, Asia, to be compliant with the living wage principle1 and Vopak engages continuously with its employees, including Middle East, China, Europe and Africa. no issues were identified, similar to last year. through regular negotiations on pay and benefits. In 2020, we paid EUR 406 million in employee expenses – 75% in In 2020, the Vopak WeConnect Foundation reached The living wage principle is also included in the Vopak salaries, the remainder in benefits (including social security out to the local communities by making one-off Global Supplier Code and in the company’s global charges and pensions). Over recent years, we have provided donations available to help the most vulnerable supplier and contractor performance management transparency in our approach to incentive and merit-based youth and their families during the Covid-19 program, so that its application is not limited to Vopak pay. A gender pay gap analysis was performed in the pandemic. Vopak employees played an active role employees only. Netherlands, the US and China in 2020. The outcomes in identifying local needs and handing out food confirmed that we do not have a structural gender pay baskets, meals, hygiene essentials, school supplies, 1 Due to the lack of official indicators and accurate benchmarks gap for people in the same grade and no actions needed and providing refurbished laptops and licences for available to measure basic work and living standards as a result to be taken. online learning. of the economic situation in the country, the Vopak wages paid to staff in Venezuela can only be assessed informally.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
A large scale project was Our care extended successfully executed to people in our under exceptional local communities circumstances Construction continued Our colleagues in Qinzhou, China during supported local communities the pandemic during Covid-19 lockdown
Construction work at the Qinzhou terminal is back on track Vopak encourages employees to take an active part in their local after Covid-19 restrictions related interruptions. Despite, communities. During the pandemic, we have seen many Vopak the project achieved one million safe working man hours. colleagues lend a helping hand in their local communities.
Vital products such as methanol will be stored at this terminal in China. Several terminals made donations to support local healthcare services, emergency response Methanol is prevalent in our daily lives, not only is it used to produce efforts or set up their own fundraising program. Through the Vopak WeConnect Foundation, synthetic fiber, it can also be a more sustainable fuel source alternative. 20 donations for Covid-19 have been organized to alleviate the needs of young people and their families, providing essentials such as meals, school supplies and face masks.
Vopak Annual Report 2020 Key developments by division Americas Key developments by division
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Key developments by division 48
Chris Robblee President Vopak Americas Americas “We are well positioned to support our customers with logistical solutions. Our business across the Americas has proven Division developments In 2020, we benefited from new distribution capacity at our resilient to unprecedented challenges and we have been Over the course of this year, our primary focus has been the Alemoa and Veracruz terminals in the supply-short markets exploring new opportunities in the region. These opportunities safety of our people and customer service. All our terminals of Brazil and Mexico. We also benefited from the strong complement Vopak’s capabilities and seek a clear path remained operational, and we are very proud of how our storage demand in Canada, driven by contango oil markets. to profitability and balancing risks with partnerships. colleagues have managed ‘business as usual in unusual times’. We are extremely proud of all our employees for taking the necessary precautions and working from home where Financial performance possible. We are also proud to be servicing all our customers In 2020, we acquired three industrial terminals along the US In 2020, the Americas division posted solid results, across the Americas by putting our best practices and Gulf Coast. In addition, we continued expansion projects at supported by robust cost efficiency measures launched technology to work to ensure our terminals are operated Veracruz in Mexico, Deer Park and our joint venture Vopak immediately after the onset of the global Covid-19 pandemic. safely and efficiently.” Moda Houston in the US. At the same time, we pushed ahead with construction of a new industrial terminal at Corpus Christi. Americas reported an increase in revenue and EBIT for 2020 – excluding exceptional items. Revenue increased by 3%, Americas The Americas Division contributed to Vopak’s digital with new capacity in Mexico, Brazil and Panama more than transformation and MOVES program with successful offsetting the negative impact of Covid-19 on variable Number of terminals2 implementations in both North and Latin America. In line chemical revenues. EBIT increased by 16%, due to higher with Vopak’s vision of becoming a more diverse and inclusive revenue and further cost efficiency measures. company, we developed and implemented a Diversity and Inclusion Program. Slow progress with offshore bunkering opportunities in 22 Panama resulted in an impairment whereas positive and Market overview ongoing discussion on land lease renewals resulted in Share of EBITDA Total storage capacity Vopak’s storage and handling business throughout the a reversal of an earlier impairment in Canada. Americas proved resilient to the unprecedented events 2 In % of EBITDA from all divisions In million cbm of the global pandemic affecting our key markets. After -excluding exceptional items- a sluggish first half year, we saw demand for chemicals recovering in the second half of 2020, as economies started 2019: 2019: In EUR millions 2020 2019 to reopen, with a gradual improvement in both volume 22% 19% 5.3 4.4 Revenues 322.9 313.7 and sales. Outside the US, there are clear opportunities in Operating profit before depreciation Latin America stemming from continued economic growth and amortization (EBITDA)1 188.4 165.2 Total Injury Rate (TIR) OriginalAMERICAS contract duration and energy sector deregulation. Operating profit (EBIT)1 126.0 108.5
5% Average capital employed 829.8 707.8 For every 200,000 hours worked < 1 year 2 for own personnel and contractors 1-3 years The petrochemical industry continues to evolve in the Storage capacity (in million cbm) 5.3 4.4 > 3 years Americas, with companies reviewing ownership of assets. Occupancy rate subsidiaries 92% 91% 2019: 46% 49% Best-owner mindset enables petrochemical companies Proportional occupancy rate 92% 91% 0.40 0.26 to divest assets – including marine terminals – to release Propotional EBITDA1 188.2 164.1 value that can then be redeployed on core activities, like 1 Excluding exceptional items. the Dow transaction. 2 At 16 February 2021.
Vopak Annual Report 2020 Asia & Middle East
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Key developments by division 49
Michiel Gilsing President Vopak Asia & Middle East Asia & Middle East “Across the region, we are progressing well with our strategy execution, despite Covid-19 challenges. Our service delivery is Division developments terminals in Asia and Middle East showed rather stable at a high standard and customer satisfaction reached On safety and sustainability, our performance continued to be performance due to the contract structure. Chemicals storage an all-time high, supported by the continued digital significantly above market average standards by focusing on demand in distribution markets remained challenging across transformation and safety performance. All of these improving personal safety, processes and integrity of our assets. Asia, but held up by new opportunities as demand for were possible thanks to the commitment and dedication Our customers also appreciated and valued our consistently chemicals soared in medical and personal care products. of our people who worked tirelessly to ensure we store vital products with care. high standards of service especially during this challenging Our strong contract portfolio with many long-term take-or-pay In 2021 and beyond, we will continue to develop our year. Our NPS reached an all-time high of 65 this year. contracts support the resilience of our business performance portfolio, digitize our processes and invest in our people. during the downturn. I am convinced that these measures will help us to emerge Projects in Indonesia and Australia, some of our key distribution more resilient and differentiated in our markets.” markets, progressed well. Expansions in Jakarta and Merak Financial performance were commissioned in the second half of 2020, with a Covid-19 The division reported a 13% decrease in EBIT for 2020, related delay – while our expansion in Sydney is on track for excluding exceptional items. Earnings were supported by Asia & Middle East completion in 2021. We also signed a Letter of Intent with the oil contango, which benefited our oil hub terminals Chandra Asri, Indonesia’s largest integrated petrochemical in Singapore, Malaysia and Fujairah. Although, financial Number of terminals2 company, for a new partnership in industrial terminals. In performance was impacted negatively by an accounting loss addition, we have brought new capacity into operation in recognized at our associate industrial terminal (PT2SB) in Pengerang, Malaysia, to meet increased customer demand. Malaysia, partly in connection with prior year. This was related to this terminal being fully commissioned, and settlement of 19 With regard to new energies, we launched a study in various customer contract discussions. As well as finalizing Singapore to investigate the potential use of flow batteries the accounting of several specific non-cash items related to Share of EBITDA Total storage capacity in storing and supplying green energy at industrial locations. depreciation charges on fixed assets and deferred tax liabilities We continue to explore potential new technologies to improve in connection with the complex tax environment. Occupancy 2 In % of EBITDA from all divisions In million cbm safety and efficiency in our operations – for example, in rates improved from last year as a result of the oil contango. -excluding exceptional items- Singapore we rolled out drone solutions and piloted the use of autonomous surveillance rovers at our terminals. 2019: 2019: In EUR millions 2020 2019 33% 35% 15.5 15.1 Revenues 289.3 305.0 Market overview Operating profit before depreciation Supported by contango conditions in world oil markets, we and amortization (EBITDA)1 276.6 309.1 Total Injury Rate (TIR) OriginalASIA ME contract duration saw increased storage demand in Singapore, Malaysia and Operating profit (EBIT)1 213.1 245.8
6% Fujairah. 2020 also saw the implementation of IMO 2020 Average capital employed 1,123.6 1,458.5 For every 200,000 hours worked < 1 year 2 for own personnel and contractors 1-3 years regulations, reducing maximum sulphur in marine fuels Storage capacity (in million cbm) 15.5 15.1 > 3 years to 0.5%, supporting demand for our infrastructure in Occupancy rate subsidiaries 87% 81% 2019: 54% 40% main bunkering locations. However, restrictions in air travel Proportional occupancy rate 91% 85% 0.22 0.14 as a result of Covid-19 led to lower demand for jet fuel, Propotional EBITDA1 319.6 326.6 resulting in less volume in jet distribution in Australia. 1 Excluding exceptional items. Despite volatile chemical distribution markets our industrial 2 At 16 February 2021.
Vopak Annual Report 2020 China & North Asia
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Key developments by division 50
Chen Yan President Vopak China & North Asia China & North Asia “I am very pleased with our achievements in 2020. We managed the Covid-19 situation very well in the division. We achieved good Division developments In South Korea, we continued to experience stable occupancy financial and operational results under more difficult Vopak operations in China and North Asia managed the rates thanks to long-term contracts. Throughput numbers, circumstances and have significantly progressed on our Covid-19 situation well. Vopak’s business performance was however, were negatively impacted, mainly because of reduced growth agenda. positive, in contrast to some other businesses in our region exports due to lockdowns. We have established a strong competitive industrial terminal that were severely impacted by lockdowns. China’s economy position and further enhanced our brand name in terms of both safety performance and service delivery. was first to recover, starting in the second half of 2020 and Vietnam posted positive economic growth in 2020, albeit at I am confident that we will build upon this momentum and the economies of South Korea and Vietnam followed suit. a lower rate due to the impact of Covid-19. We are already achieve good results in 2021 and beyond.” seeing a gradual recovery in the export market and we expect Our new 290,000 cbm industrial terminal in Qinzhou is this recovery to accelerate, going into 2021. scheduled for commissioning in Q2 2021. We managed to secure a number of long-term industrial contracts at Caojing Financial performance to support growth in our customers’ businesses there. Early EBIT from China & North Asia, excluding exceptional items, China & North Asia in 2020, we successfully commissioned our expansion project decreased by 11% in 2020 to EUR 45.4 million. The decrease in Vietnam, adding 20,000 cbm in chemicals storage and reflects the impact of customer settlements benefitting 2019. Number of terminals2 handling. In 2020, we also received final payments from the Performance in 2020 was supported by strong demand for divestment of our 49% stake in the Yangpu oil terminal in chemical storage services in a volatile market. Our results Hainan at the end of 2019. included an exceptional gains of EUR 33 million from the sale of our stake in the Yangpu terminal in Hainan. 8 Market overview In China, despite Covid-19, we are seeing continued Long-term prospects for the division remain positive, with Share of EBITDA Total storage capacity investment in petrochemicals from both multinational and economies in our division expected to recover and sustain state-run companies, creating opportunities for Vopak in healthy growth in the coming years. 2 In % of EBITDA from all divisions In million cbm industrial terminals. Although we saw healthy occupancy -excluding exceptional items- rates in 2020, the distribution business remains highly competitive. In China, the majority of our terminals serve 2019: 2019: In EUR millions 2020 2019 industrial customers with long-term contracts, therefore less 7% 7% 2.8 2.8 Revenues 42.0 38.9 vulnerable to short-term market fluctuations. Vopak upholds Operating profit before depreciation high standards in terms of safety and environmental and amortization (EBITDA)1 56.9 62.4 Total Injury Rate (TIR) OriginalCHINA NA contract duration protection, which continues to be well recognized by Operating profit (EBIT)1 45.4 50.8 government authorities and customers. Average capital employed 420.0 404.0 For every 200,000 hours worked 22% < 1 year 23% 2 for own personnel and contractors 1-3 years Storage capacity (in million cbm) 2.8 2.8 > 3 years China’s overall petrochemical demand recovered after a Occupancy rate subsidiaries 80% 75% 2019: sharp fall in the first half of the year as a result of Covid-19. Proportional occupancy rate 89% 70% 0.11 0.08 Consequently, most of our industrial customers have been Propotional EBITDA1 86.9 100.5 55% able to return to normal run rates and benefitted from low 1 Excluding exceptional items. feedstock costs. 2 At 16 February 2021.
Vopak Annual Report 2020 Europe & Africa
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Key developments by division 51
Patrick van der Voort President Vopak Europe & Africa Europe & Africa “Throughout 2020, we have been able to serve our customers without interruption notwithstanding Covid-19 disruptions. Division developments Across Europe, the energy transition and sustainability are high However, project execution faced challenges causing some While Covid-19 may have dominated the agenda, we were on the agenda. This has long-term implications for Vopak; it will delays in new-built capacity. nevertheless able to make steps in achieving our strategic create new opportunities for growth, but it might also bring a Looking beyond 2020, we see that the energy landscape in objectives in Europe & Africa. decline in other markets and could require additional Europe is changing. We believe that the energy transition investment to comply with more stringent emission controls. will create opportunities for Vopak to develop new low-carbon or carbon-neutral infrastructure. In January 2020, we completed the divestment of our We expect the demand for storage for chemicals and gases to In refining centers Rotterdam and Antwerp we see optimization terminal at Algeciras, Spain. At the same time, we started continue to grow, given the increased availability of competitive and integration opportunities with downstream chemical plants operations at the Europoort terminal for IMO 2020, chemical feedstocks in the US and the Middle East and the to strengthen our role as distribution hub for the region.” our investment in low-sulphur fuel oil infrastructure. long-term expected growth in demand for chemical products. In South Africa, our Growth 4 brownfield project in Durban and our new Lesedi terminal were commissioned, despite Financial performance delays, also due to Covid-19. At Lesedi near Johannesburg, Revenues for Europe & Africa declined in 2020, due to the Europe & Africa we built an additional 100,000 cbm in fuel storage, divestments in 2019 and early 2020. Excluding divestment connected by pipeline to our Durban terminal. impact, revenues would have shown a healthy increase. Number of terminals2 Occupancy rates improved as a result of increase in demand At Vlissingen, we completed construction of two gas storage for storage, though part of our capacity has been out of bullets, adding 9,200 cbm of storage capacity. In Antwerp, we service due to the turnaround of our chemicals terminal brought a new jetty into operation at our Linkeroever terminal. infrastructure (Botlek) and other planned maintenance 16 We are also expanding chemicals storage at Rotterdam and activities at Europoort. Antwerp, and started working on expanding our terminal at EBIT for Europe & Africa, excluding exceptional items, Share of EBITDA Total storage capacity Vlaardingen. With regard to new energies, we started building was lower, however post-divestments grew by 20% a solar energy park adjacent to our terminal at Eemshaven compared to 2019. In % of EBITDA from all divisions In million cbm2 and continued to investigate projects in infrastructure for CO2 -excluding exceptional items- storage, hydrogen and flow batteries.
2019: 2019: In EUR millions 2020 2019 Market overview 33% 34% 10.7 10.4 Revenues 532.9 590.3 Covid-19 had a major influence on markets in Europe & Africa. Operating profit before depreciation There was an increase in demand for oil storage due to and amortization (EBITDA)1 275.1 299.9 Total Injury Rate (TIR) OriginalEurope Africa contract duration the drop in oil demand as a result of the pandemic. In the Operating profit (EBIT)1 129.9 156.6 chemicals sector, we experienced lower throughput levels, Average capital employed 1,382.7 1,867.2 For every 200,000 hours worked 13% < 1 year 2 for own personnel and contractors 1-3 years related to lower consumption of durable goods, offset by Storage capacity (in million cbm) 10.7 10.4 > 3 years the increased need for chemicals in consumables such as Occupancy rate subsidiaries 88% 83% 51% 2019: cosmetics, cleaning products and food & drink. Manufacturers Proportional occupancy rate 88% 83% 0.82 0.95 36% took time to respond to these changes, leading to increased Propotional EBITDA1 276.1 301.6 demand for storage. We saw similar developments in edible 1 Excluding exceptional items. oils, biodiesel, LPG and chemical gases. 2 At 16 February 2021.
Vopak Annual Report 2020 LNG
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Key developments by division 52
Kees van Seventer President Vopak LNG LNG “During 2020, activity at our terminals remained at high levels, and our teams did a remarkable job in operating safely and Division developments Financial performance securing business continuity given the Covid-19 outbreak. Vopak LNG responded well to the Covid-19 pandemic. All The LNG division comprises joint venture and associate Projects to expand our existing capacity or set up new terminal activities continued with precautionary measures terminals and therefore has no revenues recognized at locations were broadly unaffected by the pandemic securing busines continuity. subsidiaries. The LNG results include all costs related to the disruptions. As a result, we aim to continue on the same steep growth path as before the pandemic. LNG divisional and business development activities. Recovery from the crisis offers additional opportunities In 2020, we focused on integrating two LNG import terminal that contribute to a more sustainable energy sector. acquisitions made in the previous year. We explored further EBIT -excluding exceptionals items- from our LNG division, Hydrogen optionality, carbon capture storage and Bio-LNG growth opportunities: each of our current four LNG terminals increased by 12% to EUR 42.6 million, due to continued play an acceleration role in our business development plans. are evaluating sizable opportunities to increase business via growth in LNG throughput during the year. Results were The switch from coal-fired electricity to gas will continue.” additional commercial investments. Further progress was also supported by contributions of the SPEC LNG terminal also made with the development of our LNG projects in in Colombia that was acquired in 2019. Germany, China, Pakistan, Hong Kong and South Africa. LNG Market overview Number of terminals2 In 2020, overall LNG demand was slightly lower compared with 2019 due to lockdowns introduced to stop the spread of Covid-19. This is the first time the LNG market has witnessed a decrease in demand in more than five years. 4 The pandemic had its effect on prices as well, pushing them below $2/mmbtu during the second quarter. Even so, in the Share of EBITDA Total storage capacity second half of the year, as the winter season approached in the Northern Hemisphere, LNG prices recovered rapidly. In % of EBITDA from all divisions In million cbm2 -excluding exceptional items- The low LNG price during the year, encouraged more 2019: 2019: coal-to-gas switching, especially in India and China. The 5% 4% 1.2 1.2 low price environment is also supporting further penetration of LNG in the marine shipping world. Fortunately, with In EUR millions 2020 2019 long-term take-or-pay contracts in place, Covid-19 had only Operating profit before depreciation Total Injury Rate (TIR) a marginal impact on the LNG division’s commercial results. and amortization (EBITDA)1 42.6 38.1 Operating profit (EBIT)1 42.6 38.1 For every 200,000 hours worked for own personnel and contractors The long-term outlook for LNG remains positive, and we Average capital employed 364.5 282.9 aim to expand Vopak’s current LNG footprint by adding more Storage capacity (in million cbm)2 1. 2 1. 2 2019: locations in the next few years. Proportional occupancy rate 97% 96% 0.38 0.00 Propotional EBITDA1 149.6 132.8 1 Excluding exceptional items. 2 At 16 February 2021.
Vopak Annual Report 2020 Outlook Outlook
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Outlook 53 Outlook
We have set out a clear growth strategy for our terminals. Next year, we will continue to push ahead with this strategy, investing in additional infrastructure and storage capacity and expanding our use of new digital technologies.
The Covid-19 pandemic will continue to impact economies • Many countries have taken exceptional fiscal monetary even after the virus is fully under control, with vaccines measures in response to stimulate local business and widely available. Until then, any resurgence in infections economy after the severe impact of Covid-19. Based on may force countries once more to restrict mobility and avoid the duration of the crisis, governments might amend large-scale gatherings; this, inevitably, will impact consumer their policies. behavior, GDP growth and energy demand. • Lessons from Covid-19 will become part of a new reality and our new way of working. This has positive aspects – • In 2021, the global economy is expected to recover and for example, lower travel costs and reduced need for grow in the second half of the year. Some customers office space. might be impacted by a further drop in consumer demand. Customers active in trading will benefit from The pandemic has introduced more uncertainty into our increased volatility in commodity prices. business environment. We see opportunities for growth, • Worldwide, the shift to sustainability is gaining ground. but we recognize that growth is unlikely to be linear. Changes in the world’s energy mix and measures to The majority of growth investments will be allocated
reduce CO2 emissions to limit the impact of climate towards industrial, gas and new energies infrastructures. change are likely to accelerate. Governments will play a Our positive views on chemicals have not changed. New key role through regulation and policies, introduced to growth investments in oil infrastructure are expected to be support the 2015 Paris Climate Agreement objectives. reduced and will mostly be targeted towards strengthening We aim to allocate the Investment levels and operational costs might be our leading hub positions. impacted by environmental legislation to reduce majority of our growth emissions and standards like carbon tax. We continue to seek opportunities to reduce our investments to industrial, environmental footprint and implement our sustainability gas and new energies roadmap towards our ambition is to be climate neutral by 2050. infrastructures
Vopak Annual Report 2020 Sustainability Sustainability
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
X56 XxxxxxxIntroduction to sustainability XX58 XxxxxxxGovernance and basis of preparation XX63 XxxxxxxConsolidated Sustainability Performance 64 Care for our societal impact (people) 74 Care for our environmental & climate impact (planet) 84 Care for our economic impact (profit)
Sustainability
“It’s not a matter of choosing between profitability and our planet: It is a symbiosis of both. Without profitability, capital, growth and the right people a company does not have the resources to develop and grow sustainable processes and new energies.” Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Sustainability 55 Sustainability and notes
Introduction to sustainability 56 Care for our environmental & climate impact (planet) 74 Governance and basis of preparation 58 Note 11. Our impact on climate change: GHG emissions 75 Note 1. Basis of preparation 58 Note 12. Air quality: VOC and other air emissions 78 Note 2. From stakeholder engagement to materiality 60 Note 13. Water pollution 79 Note 3. Connectivity 62 Note 14. Soil and groundwater pollution 80 Note 15. Biodiversity 81 Consolidated Sustainability Performance 63 Note 16. Energy use 81 Note 17. Water management 82 Care for our societal impact (people) 64 Note 18. Waste 83 Note 4. Occupational health and safety 65 Note 19. Circularity 83 Note 5. Process safety 67 Note 6. Human rights and decent work 69 Care for our economic impact (profit) 84 Note 7. Diversity 71 Note 20. Business ethics and integrity 85 Note 8. Training & education 72 Note 21. Innovation 86 Note 9. Nuisance 73 Note 22. Climate impact on Vopak 86 Note 10. Community engagement 73 Note 23. Our responsibility towards taxation 88 Note 24. Participation and partnerships 90
Vopak Annual Report 2020 Introduction to sustainability Introduction to sustainability
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Introduction to sustainability 56 Introduction to sustainability
Sustainability is about meeting the needs of the present without compromising the ability of future generations to meet their own needs. To live up to our purpose, we act to contribute to a more sustainable society by facilitating the introduction of vital products of the future. Through our care for people, planet and profit, we aim to create value for all our stakeholders. Our choices today must contribute to our long-term relevance in society and the well-being and development of current and future generations.
The Executive Board determines Vopak’s purpose, strategy, value creation, business conduct and This, together with our interpretation of people, planet and profit, and our acknowledgment of performance (all including sustainability) and is ultimately responsible for the implementation of Vopak’s their interdependencies, is used as the basis for the structure and information in this section: Sustainability Policy. This responsibility is delegated to division management and to the management • Care for our societal impact (people) of our operating companies. The global departments support the divisions and operating companies • Care for our environmental & climate impact (planet) in acting on this responsibility. All Vopak employees have a shared responsibility with regard to • Care for our economic impact (profit). sustainability as laid down in the Vopak Values, Code of Conduct, our Sustainability Policy and our sustainability targets. Impact of Vopak versus impact on Vopak This sustainability section presents information about the impacts of Vopak’s activities on the society, As reflected in our Sustainability Policy, our ambition is to be the sustainability leader in our industry environment and economy linked to our value creation process. The determination of (sustainability and live up to our purpose: storing vital products with care. The approach and programs to achieve this related) threats and opportunities that could potentially impact Vopak’s portfolio and/or strategy forms are integrated into our business decision making. an integral part of our strategic planning cycle. This is fully integrated into our risk management process, reference is made to the Governance, risk and compliance section. Targets on our key indicators are set at group, divisional and operating company level. Progress is monitored by the Executive Board and Supervisory Board as part of regular business monitoring and Disclosures on the potential impact(s) of climate change on Vopak are reported as part of the Care for our systematically reviewed on a quarterly basis. economic impact (profit) section and our impact on climate change (through GHG emissions) are included within the Care for our environmental & climate impact (planet) section in this sustainability section. Structure of this sustainability section The purpose of the sustainability information in our Annual Report covering the financial year 2020, is to: We aim to be clear and transparent towards our stakeholders regarding our vision, our sustainability • Respond to the key topics and expectations from our stakeholders policy, objectives and performance. Vopak informs its stakeholders actively about its sustainability • Respond to relevant societal topics performance. This has two benefits: • Comply with laws and regulations. • It enhances the support for and credibility with regard to the way Vopak manages its sustainability goals and related topics. • It enables a dialogue with stakeholders and the communities in which Vopak operates, which helps us gain insights and improve our performance in the area of sustainability.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Introduction to sustainability 57
Materiality versus demand for other topics to be reported We strive to be transparent and report relevant and balanced information. This section contains an explanation of (1) our societal, environmental and economic impacts, (2) our ambitions, how we want to achieve these and presents the developments and (3) performance in 2020 based on topics identified as material for Vopak.
Vopak’s GRI Content Index provides all necessary references to those GRI indicators in scope (as well as explanation for any indicators not reported on). This Index may be found on our website: https://www. vopak.com/sustainability/gri-content-index.
Impact of Covid-19 pandemic The pandemic spread of Covid-19 (Coronavirus) has a significant impact on all people and organizations around the world. Our main focus is on the health of the people working at our terminals, offices or at home around the world and to limit the spread of the Coronavirus, to manage the impact on our business and to assess the impact on the economy and society. Therefore, we have put global and local measures into place to protect our employees, their families and our operations based on information provided by the World Health Organization, national and local health authorities. To date, we have observed a limited impact on our operations. All our terminals are operational and there have been no significant disruptions to business continuity. The new circumstances did not lead to a deteriorated performance on safety and environmental impacts.
Vopak Annual Report 2020 Governance and basis of preparation Governance and basis of preparation
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Governance and basis of preparation 58 Governance and basis of preparation
Note 1. Basis of preparation Reporting period The reporting period for the sustainability information in this Annual Report is the 2020 financial year, Reporting criteria covering Vopak’s activities from 1 January 2020 to 31 December 2020. This report builds on the previous In recognition of the fact that sustainability is a core element of our strategy and operations, we Annual (Sustainability) Reports. combine our Sustainability Report with our Annual Report. Reporting process and assurance The information on Vopak’s sustainability performance in this report has been prepared in accordance As in previous years, Vopak has voluntarily requested its external auditor to provide limited assurance on with the Sustainability Reporting Standards Comprehensive option of the Global Reporting Initiative its sustainability reporting. For the Assurance Report of our independent auditor, reference is made to (GRI Standards as published in 2016, unless stated otherwise), to communicate and understand the Assurance report of the independent auditor. organizations’ societal, environmental and economic impacts. The Standards are designed to enhance the global comparability and quality of information on these impacts, thereby enabling greater The sustainability data used in this report was obtained from our global consolidation and management transparency and accountability for organizations. reporting system and from the HR management, compliance management, operational (safety and environment) management reporting systems and other management reporting systems. We subscribe to the view that good corporate reporting should result in the communication of a clear, concise and integrated story that explains how our company’s resources are creating value for its All data is consolidated by our Global Operations function and reviewed by the Global Control and stakeholders. As such, Vopak’s Annual Report also applies the principles of the Integrated Reporting Business Analysis function. Responsibility for reporting on sustainability is currently assigned to the Framework by the International Integrated Reporting Council (IIRC). Global Operations function. We have a continuous focus to further embed the material topics into the responsibilities of relevant departments, strengthening our non-financial data collection process and Climate-related disclosures have been prepared by using the framework as issued by the Task force proceeding with further integration into our reporting processes. At least on a quarterly basis, key on Climate-related Financial Disclosures (TCFD). Disclosures on the potential impact(s) of climate change sustainability topics are reported to the Strategic Committee, Executive Board and the Supervisory on Vopak including a description of our governance, strategy and risk management in line with the Board. Once a year, we organize a full day review of our strategy and a thematic day on climate change. requirements of TCFD are reported as part of the care for our economic impact (profit) section. Key topics and stakeholder concerns were discussed in Supervisory Board meetings. For more Our impact on climate change (through GHG emissions) is further explained in Note 11. Our impact on information, reference is made to the Supervisory Board report. climate change: GHG emissions. For further details on the governance and control framework, reference is made to the Governance, risk Financial KPIs are reported based on information included in the company’s Financial Statements, and compliance section. prepared in accordance with IFRS as adopted by the European Union. Change in reporting policies for 2020 Reporting principles Vopak has not applied any new reporting standards for 2020. Our sustainability reporting principles are based on the reporting principles in the GRI Standards, where necessary supported by internally developed standards and guidelines unless otherwise specified. Throughout the Annual Report, we have indicated how we applied the GRI reporting principles, such as materiality, stakeholder inclusiveness and reliability.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Governance and basis of preparation 59
Sustainability Roadmap Consolidation scope and boundaries Vopak is in the process of preparing an updated Sustainability Roadmap. Entities that do not meet the consolidation criteria are shown in the table below, which reconciles the The roadmap will provide an improved overview of the key sustainability topics with clear objectives storage capacity reported in the financial statements to that used for sustainability reporting purposes: that we focus on as a company. It specifies our actions and integrates sustainability even stronger into our global processes and investment decisions. As with our current Sustainability Roadmap In million cbm 2020 2019 2018 2017 2016 our updated version will be integrated into our incentive program. Total storage capacity according to Vopak Financial Statements1 35.6 34.4 37.0 35.9 34.7
For the year 2021, after finalization and formal approval of the Roadmap, we plan to update our Temporarily out-of-scope due to grace period after acquisition2 reporting in the annual report accordingly. Bahia Las Minas, Panama – – – – - 0.5 Reporting adjustments of historical data Elengy Terminal Pakistan – - 0.2 - 0.2 n/a n/a There have been no adjustments to information provided in previous reports. SPEC, Colombia - 0.2 - 0.2 n/a n/a n/a Vopak Industrial Infrastructure Americas, US - 0.8 n/a n/a n/a n/a Basis of consolidation Out-of-scope as no operational control For sustainability reporting purposes, Vopak consolidates data from its headquarters, division offices and Sabtank (Jubail), Saudi Arabia3 - 1.5 - 1.5 - 1.5 - 1.5 - 1.5 those entities under its operational control (unless acquired within the last 12 months), and from entities Sabtank (Yanbu), Saudi Arabia3 - 0.3 - 0.3 - 0.3 - 0.3 - 0.3 that report voluntarily although they are not under our operational control. Chemtank (Jubail), Saudi Arabia - 0.6 - 0.6 - 0.5 - 0.5 - 0.2 Maasvlakte Olie Terminal (MOT), Unless otherwise stated, the sustainability information in this report includes all information for Vopak’s The Netherlands - 1.1 - 1.1 - 1.1 - 1.1 - 1.1 principal subsidiaries, joint ventures and associates (as noted in Note 9.11 Principal subsidiaries, joint Ridley Island Propane Export Terminal (RIPET), ventures, associates and investments of the Consolidated Financial Statements). Canada - 0.1 - 0.1 n/a n/a n/a Vopak Ventures - equity investments – – – n/a n/a An entity under operational control implies: Estonian Railway Services (ERS - part of Vopak E.O.S.), Estonia4 n/a n/a – – – • Application of Vopak´s operational standards • Adoption of Vopak´s Code of Conduct Total out of scope for sustainability reporting - 4.6 - 4.0 - 3.6 - 3.4 - 3.6 • Being part of the three-year cycle of Vopak´s Terminal Health Assessments (THA) or equivalent Total storage capacity according In consolidating data, we apply the following principles: to the sustainabilty scope 31.0 30.4 33.4 32.5 31.1 • Greenfield Undeveloped land acquired to build a new terminal is deemed to be within reporting 1 One terminal does not meet the consolidation criteria, but does report sustainability information voluntarily: scope from the day of acquisition Vopak Terminals Korea. 2 In 2016, Vopak started to manage and operate Chevron’s existing 509,000 cbm terminal at Bahia Las Minas, • Brownfield When an existing terminal is expanded, these activities are deemed to be within in Panama. According to the consolidation criteria, the terminal is in scope for sustainability reporting as from reporting scope 1 January 2017. Elengy Terminal Pakistan (acquired as per end of December 2018) is in scope as from 1 January • Acquisition When a terminal is acquired and operations are continued, there is a grace period of one 2020 and SPEC, Colombia (acquired as per end of September 2019) will be in scope as from 1 January 2021. year before the terminal is brought within the scope of sustainability reporting. During this grace year, The three industrial terminals acquired as per December 2020 (Vopak Industrial Infrastructure Americas on the all data must be reported and monitored in our internal reporting system U.S. Gulf Coast) will be in scope as from 1 January 2022. 3 The Sabtank terminals report on safety data only for our internal reporting purposes, but has been excluded for • Divestment When terminals are closed or sold, they are removed from reporting scope from the external reporting purposes since we started sustainability reporting in 2008. date of divestment, data until the date of divestment is still included. 4 Vopak E.O.S. was divested as per April 2019.
For capacity developments, reference is made to the Leading assets in leading locations section of the Annual report, and notes 3.1 Acquisition and divestment of subsidiaries and 3.5 Joint ventures and associates of the Consolidated Financial Statements.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Governance and basis of preparation 60
Note 2. From stakeholder engagement to materiality The table below summarizes the expectations and interests of our stakeholders and the topics that they regard as key topics. It should be noted that this reflects the overall outcome per stakeholder group from Together with our stakeholders, we define the material societal, environmental and economic topics our stakeholder engagement. Expectations, interests and key topics vary for each individual stakeholder. for our company. In 2019, we conducted a full materiality assessment. For the methodology used, details on the materiality process and changes since our last report, Our response to the overall key topics and concerns of our stakeholders is embedded in the notes to the reference is made to our website: https://www.vopak.com/sustainability/stakeholder-engagement. topics in this Sustainability section.
Stakeholder group Expectations Key topics How we engage them Youth To be relevant in the future, young people deem it • Air quality: VOC and other air emissions • Vopak WeConnect projects important that a company as Vopak acts responsible • Greenhouse gas emissions • Face-to-face meetings in its environmental and societal behavior. • Soil and groundwater pollution • Information on our website and social media channels • Water pollution Customers Increasingly put sustainability high on their agenda • Business ethics and integrity • Face-to-face meetings and require Vopak, as an important link in their • Applications of best practices • Calls, emails, conferences supply chain, to at least align its sustainability policy • Occupational health and safety • Internal & external audits with theirs. • Process safety Business partners Looking for long-term relationships to realize growth • Application of best practices • Face-to-face meetings based on mutual trust and value creation. • Process safety • Calls, emails, conferences • Customer acceptance and continuation • Internal & external audits Authorities & governmental Respect (stricter) regulations, control and perform • Business ethics and integrity • Face-to-face meetings organizations safely. • Nuisance • Written contacts • Air quality: VOC and other air emissions • Information on our website • GHG emissions • Open houses & site visits • Participation in public hearings & conferences Financial and capital markets Increasingly take a long-term appreciative view of • Financial performance • Presentations, webcasts, roadshows with analysts and investors at least every quarter companies that aim for sustainable profitability. • Business ethics and integrity • Individual meetings • Customer acceptance and continuation • Capital Markets Day • General Meeting of Shareholders Neighbors and local communities Increasingly require Vopak to engage with them to • Air quality: VOC and other air emissions • Face-to-face meetings address matters such as stench and odors. • Business ethics and integrity • Written contacts • Information on our websites and social media channels • Open houses & site visits • Participation in public hearings & conferences • Vopak WeConnect projects NGOs NGOs expect Vopak to be a responsible, • Air quality: VOC and other air emissions • Face-to-face meetings transparent, cooperative and trustworthy partner. • Business ethics and integrity • Written communications • Process safety • Information on our websites and social media channels • Water pollution • Open houses & site visits • Participation in public hearings & conferences • Vopak WeConnect projects Suppliers Suppliers value long-term relationships and expect • Suppliers acceptance and continuation • Face-to-face meetings a safe and healthy workspace and fair treatment. • Customer acceptance and continuation • Quarterly calls with Tier 1 and Tier 2 suppliers • Financial performance • Contracts • Site visits • Supplier visits Employees Value a company that cares, helps to develop their • Process safety • Daily work relationships talents and offers training programs to develop the • Financial performance • Training and human resources cycles full potential of every individual. • Occupational health and safety • Employee engagement survey • Intranet, mail, internal social media – townhall sessions (digital) Senior management Determines the overall long-term strategy on our • Process safety • Ongoing internal dialogues ‘License to Operate’ and our expansion plans and • Business ethics and integrity • LEAD program ensure continued value creation for stakeholders.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Governance and basis of preparation 61
Materiality The materiality matrix showing the ranking of the 24 topics can be found at the Purpose & strategy Our materiality topics reflect the impacts of Vopak on the society, the environment and the economy. section. According to the ranking of topics determined as most relevant across stakeholder groups The 24 topics that are identified, are classified as either: and ranked as the most significant impact of our business, six key topics emerged as being the most • Key topics: We aim to fulfill a leading role with regard to these topics and have integrated these material. We report in detail on the six key topics. All other topics reported in this section are based topics into our strategic sustainability priorities on compliance with regulatory requirements and our response to actual societal topics. On these • Topics to monitor: We want to demonstrate our social responsibility with regard to these topics. other topics, we report on our management approach. We measure and report on parts of these topics in our report • Other topics: These are important topics for Vopak and are managed accordingly.
are or our o al pa t are or our en ron ental l ate pa t are or our e ono pa t People Planet Profit
o a a V a o a o a pa o a a a a o l an roun ater pollut on Appl at on o e t pra t e ra n n an e u at on a po o u to er a eptan e an ont nuat on u an e a te nan al per or an e a or on t on reen ou e a e on o a o u an r t ner u e Re unerat on er t ater ana e ent uppl er a eptan e an ont nuat on o un t en a e ent an ar t o er t a at on
Report n on reen ou e a e on Alt ou e on not ran e a e top n our ta e ol er en a e ent t e e ut e oar on er t to e trate ere ore e a e et a lon ter tar et an report tran parentl on our e on Re eren e a e to ote ur pa t on l ate an e e on
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Governance and basis of preparation 62
Note 3. Connectivity
The set-up of this sustainability section is based on the topics and outcomes from Vopak’s materiality For more information on our strategic leadership areas, reference is made to the Performance & Outlook assessment. The table below reconciles the six key topics to our value creation model, the strategic section. Our governance with regard to the sustainability-related risks and opportunities is integrated leadership areas, the corresponding risks, disclosures on management approach, performance and into our governance and risk management processes; for more information, reference is made to the outlook, and the topic-specific GRI Standards. It also provides the link with the UN Sustainable Governance, risk and compliance section. Topic-related KPIs are included in Consolidated Sustainability Development Goals (SDGs). performance and corresponding notes.
Corresponding Corresponding Corresponding Corresponding Corresponding Corresponding Key topic Vopak value creation capital SDG strategic pillar risk in Risk Paragraph performance notes GRI Standard Care for our societal impact Occupational health People • Operational leadership Note 4. Occupational health • GRI 403: Occupational Health and safety • People leadership 8 and safety and Safety (2018 version)
Process safety Natural • Operational leadership Note 5. Process safety No corresponding GRI Social & Relationships • Service leadership 8 topic-specific standard
Care for our environmental & climate impact (planet) Air quality: People Operational leadership Note 12. Air quality: No corresponding GRI VOC and other Natural 8 VOC and other emissions topic-specific standard air emissions
Water pollution Natural Operational leadership Note 13. Water pollution No corresponding GRI 8 topic-specific standard
Care for our economic impact (profit) Business ethics and People People leadership Note 20. Business ethics • GRI 205: Anti-Corruption integrity Social & Relationships 13 and integrity • GRI 307: Environmental Compliance • GRI 419: Socio-economic Compliance
Innovation Systems & Processes • Operational leadership Note 21. Innovation No corresponding GRI • Technology leadership 3 10 topic-specific standard
Vopak Annual Report 2020 Consolidated Sustainability Performance Consolidated Sustainability Performance
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Sustainability Performance 63 Consolidated Sustainability Performance 2020 target Performance 2021 target Long-term target Note 2020 2019 2018 2017 2016 Care for our societal impact (people) Occupational health and safety 4 Fatalities, own employees & contractors 0 0 1 2 2 0 0 Our first priority is to have zero fatalities Total Injury Rate (TIR), own employees & contractors (per and zero major incidents 200,000 hours worked) 0.27 0.37 0.34 0.30 0.38 0.29 0.27 Process safety 5 Major process incidents 0 0 0 0 0 0 0 Our first priority is to have zero major Process Safety Events Rate (PSER), own employees and process incidents contractors (per 200,000 hours worked) 0.17 0.14 0.16 0.12 0.26 0.23 0.16 Human rights and decent work 6 A living wage for all own employees Total number of employees (in headcount) 5,688 5,697 5,833 5,657 5,555 and our main suppliers and contractors - Percentage of employees with a living wage 100% 100% 100% 100% 100% N.R. 100% Diversity Progress to achieve Increase the proportion of women in Vopak’s 7 Percentage of women in senior management positions 16% 12% N.R. N.R. 11% long-term target senior management positions to at least 20% Care for our environment and climate impact (planet) 11 GHG emissions Increase energy Our ambition is to be climate neutral by Increase energy efficiency Total GHG emissions - scope 1 & 2 (metric tons) efficiency and seek 444,150 408,475 417,409 402,256 426,576 2050 and to remain the industry leader and seek opportunities opportunities for in sustainability in the period up to 2030 - Direct GHG emissions - scope 1 (metric tons) 207,078 154,807 165,720 166,917 186,142 for renewables renewables and 2050 - Indirect GHG emissions - scope 2 (metric tons) 237,072 253,668 251,689 235,339 240,434 Air quality: VOC and other air emissions Progress to achieve Reduce our societal impact by more than 20% 12 Societal impact reduction of our VOC emissions 19% 6% Q.R. Q.R. Q.R. long-term targe compared to 2016 Water pollution 13 Total number of reportable spills Ensure effective 8 6 4 1 9 Ensure effective spill spill prevention Total product spilled (reportable spills in metric tons) 26 2 1 1 18 prevention and secondary Ensure integrity of the environment: and secondary containment in high Zero uncontained spills of harmful products Soil and groundwater pollution containment in 14 risk areas Total number of uncontained reportable spills high risk areas 6 6 4 7 25 Total product spilled (uncontained reportable spills in metric tons) 301 19 29 25 145 Our economic impact (profit) Business ethics and integrity 20 Number of fines from permit violations 0 1 0 2 2 0 Amount of fines from permit violations (in EUR thousands) 0 0 0 2,124 96 0 Zero permit violations and no violations of Code of Conduct Total number of breaches of Code of Conduct 100% completion of Code of Conduct training 0 6 13 3 8 3 for own employees Annual EUR 10 million Innovation Our aim is to remain industry leader by 21 investment available to improving safety, service and efficiency Q.R. Q.R. N.R. N.R. N.R. achieve long-term target N.R. Not reported as topic was not in sustainability reporting scope. Q.R. Only qualitative reporting. Vopak Annual Report 2020 Care for our societal impact (people) Care for our societal impact (people)
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 64 Care for our societal impact (people)
Vopak is storing vital products with care. Our care starts with the people who work for our company and extends to the communities in which we operate and society at large. We aim to ensure that all the products we store are taken care of in the right environment and the right manner. We are aware that safety depends, in part, on the way we build our terminals. The products we store are useful for society, but some can be potentially harmful to the environment or can endanger people’s health if stored or handled inappropriately. Our first responsibility is to provide safe, clean and efficient storage. We must ensure that our employees and contractors can return home safely after each working day, and create value for all our stakeholders, from shareholders to neighboring communities. Our ambition is to be the sustainability leader in our industry and to live up to our purpose of storing vital products with care. We strive to be a responsible member of the communities in which we operate.
Value creation capital Input Output & Outcome Impact People Employees provide their time, expertise and knowledge. We develop our people, train them in new skills, motivate them, We also use contractors and other service providers in our and aim to provide a healthy and safe working environment for both operations. We invest in training and talent development employees and contractors. to build a skilled, diverse workforce.
Social & Relationships To carry out our business, we rely on relationships with As Vopak, we handle hazardous products with care. We ensure safe stakeholders. These include our customers – in addition to our delivery of these products to our customers, providing a vital link in employees, suppliers, business partners and governments. the supply chains for oil, gas, chemicals and vegoils. We facilitate We also need the continued goodwill of the local communities novel clean(er) products through appropriate infrastructure. in which we operate. Together, these relationships provide our
‘license to operate and grow’.
Natural To run our business, we use natural resources, such as energy We work to minimize our negative effects on the environment and water. We also hold areas of land and sea to build and – by reducing both vapor and GHG emissions and pollution to air, operate our terminals. water and soil.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 65
Note 4. Occupational health and safety We monitor and report any safety incident at our facilities involving our own employees, contractors and third parties. We also monitor our employees periodically for any effects of exposure to the Definition, reporting policies and boundaries chemicals we handle and store. It is the obligation of everyone at a Vopak facility to report any (potential) safety or health issue in the reporting system Enablon accessible by all employees. a op a a a o We strongly believe that all safety incidents can be prevented and are committed to the goal of zero personal incidents. Occupational This includes the impact of fatalities, incidents, sickness, exposures health and safety to operational hazards and long-term exposure to chemicals. Occupational safety
Reporting policies 2020 2020 Long-term Target Performance ambition Occupational health and safety are managed and reported according to OSHA 1904. The safety rates (Total Injury Rate (TIR) and Lost Time Injury Rate (LTIR)) are calculated as number Occupational health and safety Our first priority Fatalities (own employees and contractors) 0 0 is to have zero of incidents per 200,000 hours worked. fatalities and zero Total Injury Rate (TIR), own employees and 0.27 0.37 major incidents contractors (per 200,000 hours worked) Boundaries Safety relates not only to Vopak employees, but also to the employees of our contractors when they are working on our sites. Sickness is only reported for our own employees. In 2020 we did not have a fatality, nor any major injury leading to a permanent disability of one of our employees or contractors. This is in line with our targets of zero fatalities and major incidents (those Management approach incidents leading to life changing injuries). At Vopak, we operate a global network of terminals and we handle a wide range of liquid and gaseous products and feedstock for the chemical, petrochemical and agricultural industry. If handled Safety is our first and foremost priority. At the end of each working day, each person at our terminals incorrectly the products that we store can endanger the health and safety of our employees, should return safely to their homes and families. We have to maintain our focus on how to further contractors and everyone within the community surrounding our facilities. improve our safety culture, systems and hardware to ensure a safe working place for all.
Therefore, we store and handle these products according to the latest standards, best practices and Occupational safety performance applicable legislation. It is our responsibility to keep our employees, contractors and neighbors safe from any incident occurring during the operation of our facilities and storage of the products. Own employees Contractors Combined 2020 2019 2020 2019 2020 2019 Our global standards cover key operational and maintenance processes. In the daily operation and Fatalities 0 0 0 1 0 1 maintenance of our terminals, we encounter non-routine activities that are managed with additional control measures such as control of work procedures. Every Vopak employee, contractor and service Lost time injuries (LTIs) 13 18 15 17 28 35 provider is required to adhere to our Safety, Health and Environmental requirements, which are Restricted work cases (RWCs) 8 6 8 16 16 22 formalized through employment and service contracts, in all locations and at all times. Safety Medical treatment cases (MTCs) 4 2 14 7 18 9 committees are organized on a terminal level at all terminals. In addition to safety, we strive for a Total Injury Count (TIC) 25 26 37 40 62 66 healthy workforce. In several countries, Vopak encourages its employees to incorporate more healthy Total Injury Rate (TIR) 0.47 0.49 0.32 0.28 0.37 0.34 elements into their lifestyle through, for instance, company sports events, health checks, advice on Lost Time Injury Rate (LTIR) 0.25 0.34 0.13 0.12 0.17 0.18 diet, a healthy variety of food in the company’s canteens and work-life balance initiatives.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 66
Total Injury Rate Lost Time Injury Rate Occupational health 0.5 0.5 Sickness Rate 0.4 0.38 0.37 0.4 n 0.34 3.0 0.3 0.29 0.30 0.3 2.5 2.4 2.2 2.3 2.2 2.2 0.2 0.2 0.18 0.17 0.13 0.14 0.12 2.0 0.1 0.1 1.5
1.0 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 0.5
Occupational safety rates per division 2016 2017 2018 2019 2020 Total Injury Rate Lost Time Injury Rate 2020 2019 2020 2019 Sickness rate per division Americas 0.40 0.26 0.11 0.08 Sickness rate % Asia & Middle East 0.22 0.14 0.11 0.06 2020 2019 China & North Asia 0.11 0.08 0.03 0.04 Americas 1. 5 1. 2 Europe & Africa 0.82 0.95 0.42 0.58 Asia & Middle East 1. 6 1. 6 LNG 0.38 0.00 0.19 0.00 China & North Asia 0.7 0.7 Global HQ 0.00 0.00 0.00 0.00 Europe & Africa 4.4 4.5 Total 0.37 0.34 0.17 0.18 LNG 2.8 4.4 Global HQ 2.1 1. 6
Despite continuous efforts to improve safety, we were not able to deliver in 2020 on our target (TIR of Total 2.2 2.2 0.27) with regard to personal safety. In both 2019 as well as 2020, 47% of Vopak staff worked in areas of higher accident risk (mainly Evaluation of the root causes of the personal incidents has identified that most cases occurred due to operational and maintenance staff at our terminals). There were no reported cases of employees slips, trips and falls, impact by an object (construction/ maintenance) and strains from manual suffering from occupational diseases. handling activities.
We are committed to further improve safety in 2021 with our ‘Trust and Verify’ program that was launched in 2018. This program, which is expected to be fully implemented in 2021, will further increase safety awareness and encourage a culture of personal accountability throughout the company, helping us prevent incidents and ensure a safe working environment. More information on the ‘Trust and Verify’ program as well as other programs and processes in place to improve safety can be found in the Operational leadership chapter.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 67
Note 5. Process safety Management approach The processes of storing and handling liquids and gases at a Vopak facility requires safety measures Definition, reporting policies and boundaries to prevent any incident related to the operations. All staff working at Vopak facilities are obliged to report process safety incidents via Enablon. Another core element is the constant monitoring and reporting of every process incident at our facilities and investigating the root cause in order to a op a a a o prevent similar incidents. We share the results of these investigations with all of our facilities by Process safety This includes incidents of product contaminations, damages to means of a written alert. installations, spills and other product losses of primary containment.
The ‘Assure’ program has enabled us to prioritize our process safety initiatives, and helped us meet Reporting policies our own expectations with regard to major accident prevention. Assure is based on global Vopak tools Process safety is managed and reported according to the API standard RP 754 and events are measured that were already available within our company. These include a selection of the ‘Vopak Way based on the significance of the incident, with Tier 1 as the most significant. Standards’, ‘Vopak Fundamentals’ and key modules from ‘My Learning Operations’. The program focuses on compliance in four areas: Major process incidents are those Tier 1 events with the highest severity and catastrophic impact. People focuses on having a workforce with all necessary skills to safely operate and maintain our terminals, whilst generating and maintaining a good safety culture According to our materiality assessment, the topic of process safety includes incidents of Assets focuses on adequate maintenance of safety-critical assets and ensuring that new assets are contamination, fires, damage and loss of primary containment (LOPC). properly designed and commissioned Processes focuses on having in place the key organizational processes controlled through procedures A (product) contamination is any situation where a customer’s product is out of contract specification and methodologies to safely operate and maintain our terminals and cannot be used as intended or is reduced in value, or needs unplanned after treatment (e.g. mixing, Legal requirement focuses on compliance with all legislation relating to major accident prevention. blending, sparging) due to the action of another substance on that product. Implicit in this requirement is to know what legislation must be complied with, what this legislation demands and to be able to demonstrate that there are no gaps in our compliance. Contaminations and damages could be both process and non-process related. Both types of incidents are reported in this note. Examples of non-process contaminations are product damaged by overheating Asset integrity is secured through the 3-Year Maintenance Program (3YMP), in which a risk-based due to tank or line heating systems or due to lack of failure of nitrogen inerted atmosphere. approach is used to determine the level of maintenance required for key assets such as tanks, pipelines and plant control systems. The 3YMP is reviewed annually during the budget cycle, in All Tier 1 and Tier 2 LOPCs are reported in this note. For more detailed reporting on spills, reference is addition to the routine maintenance activities. Consequently, the progress against this program is made to Note 13. Water pollution and Note 14. Soil and groundwater pollution. Both terms – ‘spills’ and measured quarterly and benchmarked against the original plan, as part of our divisional reviews. In ‘LOPCs’ – are used to refer to the same definition: an unplanned or uncontrolled release of material from cases where additional maintenance is required, these requests are assessed and resourced to primary containment, including non-toxic and non-flammable materials. ensure that asset integrity is not at risk.
The process safety event rate (PSER) is calculated as the total number of Tier 1 and Tier 2 incidents per For all products stored at our terminals, we require a Material Safety Data Sheet from our customers 200,000 hours worked. in order to appropriately store and handle these products.
Boundaries All Tier 1 and Tier 2 process safety events are reported in this note. This includes process-related incidents that create personal injuries involving employees, contractors and third parties.
With regard to damages, we have only included damages with a cost larger than EUR 50,000.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 68
Process safety events per type 2020 2020 Long-term Target Performance ambition Tier 1 PSE Count Tier 2 PSE Count Tier 1 & Tier 2 PSE Process safety Our first priority Major process incidents 0 0 is to have zero 2020 2019 2020 2019 2020 2019 major process Fatality 0 0 0 0 0 0 Process Safety Event Rate (PSER), incidents own employees and contractors Lost time injury (LTI) 1 4 0 0 1 4 (per 200,000 hours worked) 0.17 0.14 Restricted work case (RWC) 0 0 1 0 1 0 Medical treatment case (MTC) 0 0 0 2 0 2 Loss of primary containment Process Safety Event Rate (LOPC) 7 12 12 11 19 23 0.5 Fire 0 1 0 0 0 1 PRD activation 0 0 0 0 0 0 0.4 Total 8 161 13 13 21 29
0.3 0.26 1 In 2019, the Tier 1 Fire and one of the Tier 1 LOPCs occurred by the same event, therefore counted as one event 0.23 in the total Tier 1 PSE Count. 0.2 0.16 0.12 0.14 0.1 Product contaminations 2020 2019 2016 2017 20181 2019 2020 PSE Non-PSE Total PSE Non-PSE Total 1 The significant improvement in our 2018 process safety performance is partially explained by the changed threshold levels of API RP 754. Our process safety incident classification has been aligned with the new API 754 standard. This means that some Americas 2 3 5 3 2 5 incidents have been downscaled to a lower tier classification, due to the impact of the incident (such as non-flammable edible oils). The impact of the application of the new standard in 2018 is that six LOPCs occurred in 2018, are classified as Tier 3 instead of Tier 2. Asia & Middle East 1 1 2 0 8 8 China & North Asia 0 3 3 0 2 2 Europe & Africa 4 4 8 0 13 13 Process safety performance per division LNG 0 0 0 0 0 0 Tier 1 PSE Count Tier 2 PSE Count Tier 1 & Tier 2 PSE Global HQ 0 0 0 0 0 0 Total 7 11 18 3 25 28 2020 2019 2020 2019 2020 2019 Americas 0 1 3 1 0.12 0.05 Asia & Middle East 2 3 6 5 0.15 0.10 Damages (>50k EUR) China & North Asia 1 1 1 1 0.09 0.09 2020 2019 Europe & Africa 3 10 3 6 0.17 0.44 Property Product Total Property Product Total LNG 2 1 0 0 0.38 0.30 Americas 1 0 1 2 0 2 Global HQ 0 0 0 0 0 0 Asia & Middle East 4 1 5 7 1 8 Total 8 16 13 13 0.14 0.16 China & North Asia 1 0 1 1 0 1 Europe & Africa 7 1 8 5 0 5 LNG 1 0 1 0 0 0 For 2020, we were able to meet our target (PSER of 0.17). Global HQ 0 0 0 0 0 0 Total 14 2 16 15 1 16
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 69
Note 6. Human rights and decent work Headcount Gender Employment type Employment contract 31-Dec-20 Men Women Full-time Part-time Permanent Fixed term a op a a a o Americas 942 83% 17% 100% 0% 99% 1% Asia & Middle East 1,434 84% 16% 99% 1% 94% 6% Human rights This includes (but is not limited to) the fair treatment of employees and (sub-)contractors, respect for the rights of indigenous people and China & North Asia 1,044 85% 15% 100% 0% 48% 52% land use rights, as stated in our Code of Conduct and Supplier Code. Europe & Africa 1,593 83% 17% 92% 8% 94% 6% LNG 218 83% 17% 95% 5% 96% 4% a op a a a o Global HQ 457 74 % 26% 89% 11% 92% 8% Decent work This includes, (but is not limited to) complying with the OECD Total 5,688 83% 17% 96% 4% 86% 14% guidelines, the possibility for employees to participate in collective labour agreements and Vopak ensuring that all its employees and contractors earn a living wage as stated in our Code of Conduct Age distribution per 31 December 2020 and Suppliers Code. 2,500
2,000 2020 2020 Long-term 1,755 Target Performance ambition 1,665 1,500 Human rights and decent work 1,316 Total number of employees (in headcount) 5,688 1,000 Percentage of employees with a living wage 100% 100% A living wage for 683 all own employees 500 and our main 219 suppliers and 50 contractors 15 - 24 25 - 34 35 - 44 45 - 54 55 - 64 > 64
Our workforce Approximately 41% (2019: 41%) of our employees are employed under a Collective Labor Agreement 2020 2019 2018 2017 2016 (CLA), most of these employees work in the operations and maintenance departments at our terminals. Total number of employees (in headcount) 5,688 5,697 5,833 5,657 5,555 We strive for long-lasting and healthy relationships with unions and works councils all over the world in - Percentage of male employees 83% 84% 84% 84% 85% the best interest of our employees and the Company. - Percentage of female employees 17% 16% 16% 16% 15% - Percentage of employees with a living wage 100% 100% 100% 100% N.R. Number of contractors During 2020, Vopak hired contractors for in total over 10,000 person-years. The majority of our contractors are working on construction and maintenance projects.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 70
Human rights Living wages Vopak respects human rights as described in the United Nations (UN) Universal Declaration of Human In line with Vopak’s commitments under the UN Global Compact, Vopak supports the ‘living wage’ Rights, the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for principle in the UN’s Declaration on Human Rights. The goal of a living wage is to allow a worker to Multinational Enterprises, and accepts the responsibility for ensuring that all our entities respect human afford a basic, adequate standard of living through employment without government subsidies. Our rights when conducting business. policy is to pay local Vopak staff at least the living wage norms reflecting the wage levels required to meet their basic needs for living. According to our whistleblower policy, breaches to our living wage The risks of potential human rights issues lay mainly in the area of construction and maintenance principle can be reported by all employees and other stakeholders. activities, which are often performed by contractors under our supervision. Driven by the many greenfield projects, as well as maintenance activities at our existing terminals, our contractors’ exposure To ensure the wages provided to all of our employees in the countries we operate in, meet (or exceed) hours equal and mostly exceed that of our own employees, making contractor management equally the living wage standards, we carry out a ‘living wage’ assessment annually, in order to verify that the important as that of Vopak employees. company’s wages meet or exceed the living wage standards. Please note that due to the lack of official indicators and accurate benchmarks available to measure basic work and living standards as a result of Major investment proposals are required to be screened for potential human rights issues. the economic situation in the country, the Vopak wages paid to staff in Venezuela can only be assessed Our screening is based on the country in which the project is being carried out and the characteristics informally. In 2020, all countries were found compliant with the living wage principle and no issues were of the investment proposal. The screening includes an assessment of the regions where the risks of noted (2019: no issues). human rights issues are high. For these projects, specific agreements are made between all the stakeholders in the project which detail the manner in which parties will uphold human rights. Additionally, the living wage principle is included in the Vopak Global Supplier Code and in the Global All partners, contractors and suppliers are required to adhere to the Vopak Code of Conduct and the supplier and contractor performance management program, so that its application is not limited to Vopak Supplier Code, which also cover human rights. employees only.
In 2019, we launched a pilot performance management program for our suppliers and contractors, Compensation ratios which includes assessing whether appropriate human rights and decent work policies are in place, For our countries of significant operations (Netherlands, Singapore, US), we disclose the ratio between communicated and followed. This program was being implemented from 2020. the total remuneration package of the highest paid employee and the total average remuneration of Vopak employees in that country, in accordance with the GRI Standards. The calculation method for the According to our whistleblower policy, all employees and other stakeholders are required to report any calculation of these compensation ratios is consistent with the method used to calculate the CEO Pay human rights issues or other violations of our Code of Conduct or Supplier Code in confidence. Ratio as disclosed in the Remuneration report. The Trusted Person follows up on all complaints and takes remedial action where needed. For all cases reported during 2020, reference is made to Note 20. Business ethics and integrity. 2020 2019 Global CEO pay ratio 26.1 21.5 Decent work Pay ratio The Netherlands 17.9 14.9 Labor rights Pay ratio Singapore 9.6 9.1 In line with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Pay ratio United States 4.9 4.0 Multinational Enterprises, we base our decent work objectives and commitments on the International Covenant on Civil and Political Rights, on the International Covenant on Economic, Social and Cultural rights and on the fundamental rights set out in the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work.
We seek to uphold these rights in our operations and in our relationships with our suppliers, our business partners, work councils and unions within the boundaries of local laws and regulations.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 71
Note 7. Diversity Senior management composition (salary scales at or above Hay 19*, excluding Board level)
2020 Long-term a op a a a o Performance ambition
Diversity This includes diversity in gender, nationality, culture, age, physical Diversity Increase the proportion abilities and competencies. Percentage of women in senior management positions 16%* of women in Vopak’s senior management positions to at least 20% Vopak is a multicultural company with operations around the globe. This means our workforce is diverse and includes people from many different cultures, nationalities and beliefs. We respect this diversity and * Please note that in the 2020 Annual Report the definition of senior management has brought in line with the internal HR target which is salary scales at or above Hay 19. Under the former definition used in this report nurture the many different approaches and perspectives each culture brings to our business. Whatever until 2019 (Hay 20), the realization of the target would have been 14%. their backgrounds, our people share our company’s passion for service and want to perform to the best of their ability. We believe that each individual has the right to be treated with respect and dignity, and Management composition (salary scales at or above Hay 15) work in a professional atmosphere that promotes equal opportunities and prohibits discrimination or Terminal and harassment on the basis of amongst others race, color, national origin, religion, sex, sexual orientation, Executive divisional Global staff age, political orientation or trade union membership, allowing everyone at Vopak to develop their Board management teams directors Global staff HQ full potential. % employees 2020 2019 2020 2019 2020 2019 2020 2019 Gender Traditionally, our industry has been male dominated – and our workforce still comprises predominantly Men 100% 100% 77% 79% 75% 69% 77% 77% men. Our focus is on having the right expertise and skills available in key areas of the business, rather Women 0% 0% 23% 21% 25% 31% 23% 23% than on putting people into roles to meet diversity targets. To ensure sufficient competencies worldwide, Nationality we expect to increase international mobility of our employees. Dutch 100% 100% 27% 28% 92% 92% 78% 82% Other 0% 0% 73% 72% 8% 8% 22% 18% In 2020, our focus remained on increasing diversity in terms of gender, regional origin and competence. For the three lines of action that we focused on in 2020, refer to the People leadership chapter.
On a senior management level, we strive to be a reflection of the countries we operate in with a balanced gender diversity.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 72
Note 8. Training & education Equipping our people – Vopak fundamentals and processes Vopak expects all employees and contractors working at its terminals to care for safety, health and the environment. It is part of our company values. My Learning Operation (MLO) has been one of our most a op a a a o effective tools in training and assessing proficiency in the Vopak Fundamentals on Safety. In 2020, 91% Training and This refers to having competent people qualified to do their job and (2019: 87%) of our employees completed compulsory annual training on the Vopak Fundamentals. The education awareness of any safety topic related to their jobs. percentage is below 100% due to joiners during the year. In addition to our Vopak Fundamentals, we have 14 other safety-critical modules available within MLO (e.g. personal protective equipment (PPE), Attracting, developing and retaining talent is critical to our success. Vopak’s environment is changing pumps, lines and valves, etc), which are also used to train and assess our field employees. rapidly. Therefore, different skills and backgrounds are needed, now and in the future. At the same time, we need to retain critical skills to build on our existing experience and knowledge. This is even more We are also using MLO to train and assess operational employees on our core operational processes, challenging outside Europe where the Vopak brand is less visible and less well known outside the such as ship and truck handling. These training programs will be administered and monitored through industry. These are often the countries of high growth or higher growth potential. our MLO system.
Our core approach to talent management is having a strong development focus and facilitating learning We created an online Code of Conduct training for all Vopak employees. More than 88% of invited on the job. Another important program that we have used successfully is our Management Trainee employees have completed this training as per end of December 2020. program. As part of our Employee Value Proposition, we grow careers internally and promote career development within the company. This approach allows us to rejuvenate our workforce, and ensure that Training hours per employee critical skills and experience can be passed from one generation to the next. 2020 2019 We believe in internal career growth and development and therefore we focus as much as possible on Americas 27 39 recruitment from within the company where possible to fill vacancies. Asia & Middle East 43 61 China & North Asia 49 51 People development Europe & Africa 33 53 Our people development efforts are geared towards having the right people with the right skills in the LNG 55 76 right place at the right time in order to strengthen our organization and enable further growth. Global HQ N.R. N.R. Opportunities for personal growth and development are also a key component for retention of our staff. Total 36 50
Our performance review process not only focuses on measuring employees’ past performance, but also on steering long-term development. Many Vopak employees participate in this process. The Vopak In 2020, Vopak employees spent an average 36 hours in training compared to 50 hours in 2019 mainly performance management process has a strong focus on performance delivery, (360 degree) feedback due to Covid-19. For more details on how we made sure our terminals remained safely operated, refer to and the Vopak Values. Development needs are identified and translated into plans based on the Operational leadership chapter. a yearly cycle.
We believe that leadership behavior is crucial in embedding and sustaining the Vopak Values in the organization. In 2020, we also continued our cooperation with the Oxford Saïd Business School, implementing our Accelerate 2 Lead program. For more details refer to the People leadership chapter.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our societal impact (people) 73
Note 9. Nuisance Note 10. Community engagement
a op a a a o a op a a a o
Nuisance This refers to the fact that Vopak is trying to minimize its effects from Community This refers to the ambition of Vopak to support the local communities in which nuisance on its neighbours by monitoring and addressing smell, noise engagement Vopak operates (e.g. through our We-Connect program). and other complaints, by installing facilities to mitigate these nuisances. and charity
We strive to maximize our positive impact and minimize the negative impact on the communities Vopak supports local communities by stimulating job creation and economic growth through business where we operate. investments and by minimizing harm to the environment. We strive to be a responsible member of the communities in which we operate. Vapor, odor and stench complaints 2020 2019 While topics identified through the materiality survey are relevant to Vopak’s operations worldwide, other Americas 2 50 topics are essentially at a local level. We involve communities at the early development stages of growth Asia & Middle East 0 7 projects and continue our engagement throughout the lifetime of our terminals. For our communities, China & North Asia 0 0 priorities that we address include topics ranging from plastics clean up, preservation of archeological Europe & Africa 7 3 sites and mitigating the impact of truck movements during construction activities up to improving roads and local education. We are aware that stakeholder engagement requires an ongoing dialogue, with LNG 0 0 regular contacts and two-way communication. Depending on the stakeholders and the topic, Global HQ 0 0 communication is maintained through face-to-face meetings, letters and emails, information on our Total 9 60 websites, social media, open houses & site visits and participation in public hearing. Engaging with our neighbors and local communities is an essential part of our business to address these concerns and During 2020, we reduced the number of stench complaints from our neighbors. In total we received respond to them in a timely manner. 9 stench complaints (2019: 60), that originated from 9 individual incidents (2019: 12) at 5 locations (2019: 9). The desire to build sustainable relations with our communities and maintain our commitment to empowering young people, led us to continue our commitment to the Vopak WeConnect Foundation.
Vopak WeConnect Foundation Vopak encourages its employees to take an active part in their local communities. With support of the Foundation, employees initiate projects to help empower young people in the communities in which we operate alongside community groups and NGOs. Refer to the People leadership chapter for more details including 2020 developments on the Foundation.
Vopak Annual Report 2020 Care for our environmental & climate impact (planet) Care for our environmental & climate impact (planet)
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 74 Care for our environmental & climate impact (planet) We aim to ensure that all the products we store are taken care of in the right manner. While doing so, we aim to minimize the negative impact of our activities on people’s health and well-being, on the environment and on climate. We want to minimize our impact on biodiversity, land, soil, air and water.
Value creation capital Input Output & Outcome Impact Natural To run our business, we use natural resources, such as energy We work to minimize our negative effects on the environment – by and water. We also hold areas of land and sea to build and operate reducing both vapor and GHG emissions and pollution to air, water our terminals. and soil.
People Employees provide their time, expertise and knowledge. We also We develop our people, train them in new skills, motivate them, use contractors and other service providers in our operations. We and aim to provide a healthy and safe working environment for both invest in training and talent development to build a skilled, diverse employees and contractors. workforce.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 75
Note 11. Our impact on climate change: GHG emissions
Scope 2 Scope 1 Scope 3 a op a a a o
Greenhouse Gas This refers to CO2 and other greenhouse gas emissions Purchased electricity Fuel combustion Production of (GHG) emissions resulting from direct energy use in Vopak’s own for own use purchased materials operations (Scope 1) and indirect energy use resulting from energy electricity Vopak purchased (Scope 2). Employee business travel
We believe that the world must pursue the dual objectives of limiting climate change to well below Waste 2 degrees Celsius, in line with the Paris agreements, and providing access to affordable, acceptable disposal and sustainable energy and feedstocks for all. This includes reducing our own environmental footprint Contractor- and lowering our own emissions of greenhouse gases (GHG). Our ambition is to be climate neutral owned vehicles
by 2050. Product use Outsourced activities
Reporting policies To calculate GHG emissions from energy use, we have applied the following conversion factors: Other GHG emissions such as hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6) or related source products are not stored or handled by Vopak.
• Direct energy conversion to carbon emissions: Dutch list of fuels and standard CO2 emission factors, version January 2016 (from the Netherlands Enterprise Agency) 2020 2020 Long-term In metric tons of CO2 equivalents Target Performance ambition • Conversion of electricity to carbon emissions: the International Energy Agency (IEA) GHG emissions Increase 444,150 Our ambition • For the conversion of Methane emissions (CH4) and Nitrous oxide (N2O) to CO2 equivalents, we have Total GHG emissions – scope 1 & 2 energy is to be climate used: Global Warming Potential Value from IPCC Fifth Assessment Report (AR5). We also applied efficiency neutral by 2050 this for the calculation of methane emissions over the comparative years 2015-2018. This is a change - Direct GHG emissions – scope 1 207,078 compared to the disclosed methane emissions in our previous reports, which was based on IPCC - Indirect GHG emissions – scope 2 237,072 AR4 and only related to venting in our LNG activities. Under AR5, we now also account for methane slip in our combustion processes in addition to the venting of methane in our LNG activities. The majority of our GHG emissions are generated through operational processes such as production of Boundaries steam for heating purposes (gas consumption) or through electricity consumption for powering our pumps Vopak’s reporting on GHG emissions (calculated based on energy use), encompasses scope 1 (direct and, on a lower level, for heating and cooling. The amount depends on (1) the products we store for our energy use and emissions from the combustion of fossil fuels) and scope 2 emissions (indirect energy customers, (2) the weather conditions and (3) the amount of product pumped (electricity consumption). use and emissions from electricity and steam purchased for our own use). Our reporting on GHG
emissions includes carbon dioxide (CO2), methane (CH4) and N2O. We also see greater energy efficiency as a way to reduce our carbon footprint and we are driving various efficiency improvement projects in different parts of our network. We are particularly looking for ways to reduce energy consumption from heating – heating accounts for a large part of our current energy use.
Energy efficiency teams at our terminals strive to reduce our energy use through smarter equipment, smarter processes and digital innovation, including the use of sensors. We also increase energy savings worldwide through insulation, variable speed drives and led lights.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 76
We work on the use of sensors to gather data and detect at an earlier stage and with more accuracy For LNG operations at our on-land terminals in The Netherlands and Mexico. The electricity used in the where pipelines and tanks need maintenance, which helps reduce energy consumption. LNG operations is mainly used for pumping and is not from renewable resources.
We are looking at ways to develop and use renewable energy at or around our sites and on our buildings. Our LNG facility in Pakistan (in reporting scope as per 2020) and our LNG facility in Colombia (to be included in reporting scope as per 2021) consist an LNG, onshore infrastructure and gas pipelines which For more details on the steps that we have made in improving energy efficiency, reference is made to connect the facilities to the gas grid. Chartered Floating Storage and Regasification Units (FSRUs) are Note 16. Energy use. used for receiving LNG. Regasification at these facilities takes place (with the same process as on-land LNG terminals) on the FSRU and the gas is transferred to the mainland where, under high pressure, it GHG emissions by emission type enters the grid of the customer. As the FSRU’s are generally not connected to the electrical power grid onshore, the energy used for pumping is generated at the FSRU, using natural gas. This impacts our In metric tons of CO2 equivalents 2020 2019 2018 2017 2016 scope 1 GHG emissions.
Carbon dioxide (CO2) 443,341 406,224 416,561 401,377 426,329
Methane (CH4) 675 2,110 718 74 7 111 o o 2 Nitrous oxide (N2O) 134 121 130 132 136 etr ton per t ou an tora e apa t etr ton per ll on R re enue Total GHG emissions 444,150 408,475 417,409 402,256 426,576 2 0 2 0 20 0 200 As from 2017 we included venting in our LNG operations in the reporting of methane emissions leading 0 0 to an increase in methane emissions compared to 2016. 0 0 00
In 2020 our GHG emissions increased compared to previous years. This was largely due to the fact that 0 0 our LNG Elengy Terminal (Pakistan) is in reporting scope as per 2020, increasing our scope 1 carbon emissions with 77,430 metric tons. The divestments of several terminals partly compensated the 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 increase with approximately 26 thousand metric tons. 1 Storage capacity as per 31 December of the reporting year for the entities in-scope for sustainability reporting. 2 Revenue on a 100% basis for the entities in-scope for sustainability reporting. LNG operations require a significant amount of energy for the regasification of LNG. This brings us the challenge of investing in cleaner fuel solutions for our customers and society, while an increase of energy is needed for our operations for our operations (which should not result in higher Consistent with the increase of our absolute GHG emissions, our GHG emissions intensity per cbm carbon emissions). storage capacity and revenues also showed an increase compared to previous years. This is due to the expansion of our LNG operations. We aim to avoid increasing carbon emissions as a result of the increased need of energy by seeking renewable energy sources for this process. At Gate Terminal (the Netherlands), we convert the imported LNG into gas using process water from a nearby electrical power plant. At our LNG Terminals in Altamira (Mexico), Elengy (Pakistan) and SPEC (Colombia – not yet in reporting scope) we use regular (i.e. unprocessed) sea water.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 77
GHG emissions by fuel source GHG emissions per division
In metric tons of CO2 equivalents 2020 2019 2018 2017 2016 Direct GHG emission (scope 1) 207,078 154,807 165,720 166,917 186,142 38% of which Americas 63,401 69,863 59,670 57,445 64,827 of which Asia & Middle East 21,652 27,386 29,369 29,838 26,594 of which China & North Asia 1,771 1,516 2,465 2,981 4,008 54% of which Europe & Africa 41,506 53,790 73,450 75,856 90,558 of which LNG 78,660 2,098 764 797 155 5% 3% of which Global HQ 88 154 2 0 0 Indirect GHG emission (scope 2) 237,072 253,668 251,689 235,339 240,434 Natural gas Fuel/Gas oil LPG Electricity of which Americas 18,847 19,008 22,820 23,313 22,691 of which Asia & Middle East 64,930 56,256 49,430 46,807 47,437 We are investing in Vapor Treatment Units (VTUs) in order to reduce our VOC emissions. This brings of which China & North Asia 47,204 47,327 46,845 45,716 64,300 us the challenge that the use of these VTUs will result in an increase of carbon emissions as support of which Europe & Africa 40,688 54,124 75,253 77,912 72,904 gas combustion (mostly LPG) is needed. Since we expect that the use of VTUs will increase in of which LNG 64,328 75,728 56,384 40,747 32,439 the near future we will be confronted with this challenge. We continuously seek opportunities of which Global HQ 1,075 1,225 957 844 663 to handle vapours in a more sustainable manner. Refer for more details on VOC emissions to Total GHG emissions 444,150 408,475 417,409 402,256 426,576 Note 12. Air quality: VOC and other air emissions.
Other indirect GHG emissions (scope 3) Our 2020 other indirect GHG emissions (scope 3) from business travel and employee commuting is 2,803 metric tons (2019: 4,960). This includes transportation of employees for business-related activities (air travel and automotive travel by leased cars). Emissions from fuels used in vehicles at our terminals are reported as part of our scope 1 emissions.
However, we expect that the production of steel (tanks, pipelines, racks) and concrete (flooring and structures) needed to construct our terminals is our largest contribution to GHG scope 3 emissions. We are preparing ourselves to be able to report our scope 3 emissions of our large scale construction projects as of 2021.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 78
Note 12. Air quality: VOC and other air emissions 2020 Long-term Definition, reporting policies and boundaries Performance ambition Air quality: VOC and other air emissions Reduce our Societal impact reduction of our VOC emissions 19% societal impact by a op a a a o more than 20% compared to 2016 Air quality: VOC and This refers to the reporting of Vopak's VOC and other emissions other air emissions and its program to reduce the emissions based on the societal impact of these emissions. VOC reduction program In 2017, we analyzed our VOC emissions based on 2016 data for our 17 largest terminals. We estimated that these represent roughly 75% of our emissions globally. For this assessment, we applied the Reporting policies emission calculation model used by the authorities in the Netherlands (Caruso 4.0). Approximately As field measurement to obtain a total emission figures is not yet feasible, we make use of globally 15-20% of the emissions at these terminals relate to standing emissions from storage. The remaining acknowledged calculation programs (TANKS 4.0 and Caruso) to assess our Volatile Organic Compound 80-85% is due to handling (loading, unloading, roof landings). (VOC) emissions. These emissions occur during the storage and handling of products and are therefore an effect of our own operations. We aim to mitigate our vapor emissions to meet new legislation and, beyond what is legally required, reduce the societal impact by more than 20% compared to 2016.
The NOx, SOx and PM2.5 emissions are calculated based on our energy consumption. We have applied the following conversion factors: In 2020, 55 projects are completed at 17 locations with a total spend of over EUR 20 million, resulting in
• NOx emissions: IPCC Good Practice Guidance and Uncertainty Management in National a societal impact reduction of 19% compared to 2016. Greenhouse Gas Inventories
• SOx emissions: 2015 Specific emission factors per energy source stream Other air emissions
• PM2.5 emissions: Database for particulate matters from Dutch National Institute for Public In metric tons 2020 2019 2018 2017 2016 Health and the Environment NOx emissions 543 402 434 439 492 SOx emissions 3.7 2.7 2.9 2.8 3.2 Boundaries Particulate matters (PM2.5) 13.0 15.0 15.8 16.0 15.1 Data in this note includes information for all in-scope entities as noted in Note 1. Basis of preparation.
Management approach Approximately 70-75% of our NOx emissions originate from the combustion of natural gas and 75-80% Our prime responsibility is to comply with (local) legislation on air emissions. Our objective is to of all our fine dust (PM2.5) emissions originated from the combustion of diesel oil. reduce our VOC emissions, sometimes beyond this legal obligation.To meet this objective, we are focusing our efforts on those areas where the societal impact is largest. We developed a model in 2017 to provide guidance to the organization on possible reduction measures and their societal impact (according to the True Value method). This helps us ensure that our efforts and investments, beyond what is required from a regulatory perspective, are targeted at areas where the impact on society is greatest.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 79
Note 13. Water pollution 2020 2020 Long-term Definition, reporting policies and boundaries Target Performance ambition Water pollution Ensure effective Ensure integrity of Total number of reportable spills spill prevention 8 the environment: a op a a a o and secondary Zero uncontained Total product spilled containment in spills of harmful (reportable spills in metric tons) high risk areas 26 products Water pollution This includes the quantity and quality of discharge into surface water.
2020 2019 2018 2017 2016 Reporting policies All spills of more than 200kg are reported as reportable spills. This also includes process safety-related Total number of reportable spills 8 6 4 1 9 Total product spilled (reportable spills in Tier 1 and Tier 2 loss of primary containment according to API RP 754. metric tons) 26 2 1 1 18
Boundaries Data in this note includes information for all in-scope entities as noted in Note 1. Basis of preparation. We had 8 reportable spills into surface and sewage water in 2020 (2019: 6), with a total of 26 metric tons of product being spilled. Management approach As almost all our terminals are situated by open waterways, we particularly seek to avoid any The major spills were: unwanted discharge of product to the surface water. Prevention takes place through our focus on • Spill of 14 metric tons of ethanol at our Botlek terminal (The Netherlands) asset integrity, adherence to operational procedures, specifically designed containment and drainage • Spill of 10 metric tons of waste water at our Eurotank terminal (Belgium) facilities at our jetties and piers. In the event that product is discharged to the surface water, mitigation takes place through specific equipment present at every pier or jetty, supported by Where possible, all product that was spilled into water has been removed. services to recover and prevent further spread of contaminants.
Vopak principles on water pollution The principle of our Environmental Management System (EMS), set out in the Vopak Way Standards, based on international laws and regulations, are: • Prevention: for water contamination, this means that secondary containment, which is mandatory at every new terminal, should also be implemented at our older terminals (whenever this can be implemented simultaneously with our maintenance schedules) • A spill response program on how to act in case of a spill occurs, applicable to both soil and water.
We measure the effectiveness of the prevention of spills to surface and sewage water as part of our Assure and Terminal Health Assessment (THA) programs.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 80
Note 14. Soil and groundwater pollution Specific locations where the risk of spillage is higher, such as pumping pits, truck loading stations and jetty manifolds, are already equipped with secondary containment to prevent damage to the environment. We continue to improve the coverage of secondary containment and, led by a risk-based a op a a a o approach, we continue to improve the protection of the subsoil and groundwater at our terminals. Soil and ground- This is related to soil and groundwater pollution caused by Vopak’s water pollution operations, controlling existing soil contamination and taking In this risk-based approach, we took into account that 78% of our terminals are in the vicinity of areas of remediation measures in case of the event that an accident occurs. high biodiversity and that extra precautions (e.g. vertical barrier that isolates the Vopak location from external areas) are taken to prevent any contamination of these areas. If a spill or any unwanted Reporting policies discharge takes place, emergency mitigation procedures (e.g. scooping up contaminated soil) are in All spills of more than 200kg are reported as reportable spills. This includes process safety-related Tier 1, place at all our terminals, in accordance with the Vopak Standards: ‘Spill control’ and ‘Soil and Tier 2 and Tier 3 loss of primary containment according to API RP 754. groundwater management’.
The identification and remediation of emissions to soil and groundwater are guided by local legislation Performance and the requirements stated in our Vopak Way Standards ‘Spill control’ and ‘Soil and groundwater management’. 2020 2019 2018 2017 2016 Total number of uncontained 2020 2020 Long-term reportable spills 6 6 4 7 25 Target Performance ambition Total product spilled (uncontained reportable spills in metric tons) 301 19 29 25 145 Soil and groundwater pollution Ensure effective 6 Ensure integrity of Total number of uncontained reportable spills spill prevention the environment: and secondary Zero uncontained Total amount of uncontained containment in 301 spills of harmful 2020 2019 reportable spills (metric tons) high risk areas products Uncon- Uncon- Contained tained Total Contained tained Total The amount of uncontained spills is raised due to a spill in December at Sebarok (288 tons of low Total number of reportable spills 41 6 47 36 6 42 Sulfur Fuel Oil). Total product spilled (reportable spills in metric tons) 175 301 476 290 19 309 As the owner and/or user of approximately 1,550 hectares of land, with almost 5,000 tanks, Vopak has a responsibility for taking care of this land. The majority of our tanks are equipped with a secondary The major spills were: protection system to prevent spills and other contaminants from entering the soil and groundwater. • Spill of 288 metric tons of fuel oil at our Sebarok terminal (Singapore) • Spill of 43 metric tons of ethanol at our Botlek terminal (The Netherlands) Vopak Principles on soil contamination • Spill of 40 metric tons of waste water at our Eurotank terminal (Belgium) The principles of our Environmental Management System (EMS), set out in our Vopak Way standards, based on international laws and regulations, are: All reportable spills were remediated immediately according to the requirements stated in our Vopak • Prevention: for soil contamination, this means that secondary containment, which is mandatory Way standards ‘Spill control’ and ‘Soil and groundwater management’; however, our aim is to have no at every new terminal, should also be implemented at our older terminals (whenever this can be uncontained spills. implemented simultaneously with our maintenance schedules) • A spill response program on how to act in case of a spill occurs, applicable to both soil and water. Besides prevention, Vopak is also engaged in a process of remediation of 13 existing contaminated locations, reference is made to environmental provisions in Note 9.5 Provisions of the Consolidated Financial Statements. The cost of remediation is reported as part of environmental, safety and cleaning expenses under Note 2.6 Other operating expenses of the Consolidated Financial Statements.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 81
Note 15. Biodiversity Note 16. Energy use
a op a a a o a op a a a o
Biodiversity This applies to 78% of Vopak terminals and specifically refers to areas and classified as: Energy use This includes energy derived from natural gas, LNG/propane, • Natura 2000 sites (Europe) heating fuel, gas/diesel oil, biofuels, purchased steam, district • Areas falling under the UNESCO and the Biosphere Program heating, and renewable energy. • Areas defined by Bird Life International • Wetlands according to the Ramsar Convention.
Vopak’s reporting on energy use encompasses direct energy use from the combustion of fossil fuels We acknowledge that preserving and restoring biodiversity in and around our terminals is fundamental to our (scope 1) and indirect energy use from electricity and steam purchased for our own use (scope 2). long-term business survival. Healthy ecosystems are fundamental for sustaining production of energy, food To calculate energy, we have applied the following conversion factors:
and manufactured goods for society in the long term; they also enable us to treat and dissipate waste, maintain • Conversion of consumption to energy in terajoules: Dutch list of fuels and standard CO2 emission soil and water quality and help control pollution. We aim to avoid damage to ecosystems and contribute to factors, version January 2016 (from the Netherlands Enterprise Agency) preserving biodiversity. In our efforts to preserve biodiversity, we focus primarily on areas that are most at risk • Conversion of natural gas consumption to energy in terajoules: the Energy Information as a consequence of our operations. Administration (EIA) and for Belgium and Singapore location-specific conversion factors.
In 2011, at the beginning of the United Nations decade of biodiversity, Vopak identified the areas of high biodiversity in the vicinity of its terminals. For this, Vopak asked the University of Wageningen to conduct a In terajoules (TJ) 2020 2019 2018 2017 2016 study of the impacts that terminals could have on its environment. The study proved that the impact could be Natural gas 3,004 1,917 2,143 2,180 2,589 significant (NOx depositions, sound and light disturbances) at a distance of 5 miles from the terminal. LPG / Propane 203 220 171 150 148 Heating fuel 18 18 19 15 18 Based on these conclusions, Vopak has identified the following areas of special concern: Natura 2000 sites Gas / Diesel Oil 291 387 416 427 383 (Europe); areas falling under the UNESCO Man and the Biosphere Program; areas defined by BirdLife Total direct energy 3,516 2,542 2,749 2,772 3,138 International; Wetlands as defined by the Ramsar Convention. When applying this definition, it appears that Electricity 1,730 1,852 1,706 1,595 1,578 78% of all our terminals can have a negative impact on biodiversity in areas of special concern. Vopak has also Steam 10 31 4 1 13 drawn up a comprehensive list of species (birds, mammals, amphibians, plants and other living organisms) Renewable energy 9,415 10,058 6,944 4,125 3,036 that may be affected in these areas of special concern. If terminals are located in the direct vicinity of areas Total indirect energy 11,155 11,941 8,654 5,721 4,627 of ecological diversity, extra care is taken to prevent any damage to the neighboring area through air, soil, Total energy 14,671 14,483 11,403 8,493 7,765 groundwater and surface water contamination. Total renewable energy as a % of total energy 64% 69% 61% 49% 39% Measures taken are, amongst others, installing groundwater protection to prevent contaminated groundwater flowing towards these area’s and adapting the lighting of our terminals to minimize the disturbances for bird migrations. For new terminals, biodiversity matters are taken into account in the design phase of every new The increased energy consumption over the past three years is mainly due to the increased activities terminal through our global standard on Environmental Impact Assessment. For example, the new jetty at at our LNG operations. the terminal in Panama was designed to prevent the disturbance of a (small) coral reef.
Vopak will continue its approach to biodiversity. We remain committed to reducing our impact on the identified areas of special concern where protection of ecological diversity is most urgent. In 2021, our Global Environmental Impact Assessment standard will be updated to formally include the principles, which we are already adhering to in practice.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 82
Note 17. Water management era oule per ll on tora e apa t era oule per ll on R re enue 00 a op a a a o 00 0 Water This refers to the, e.g. treatment of rainwater, of water used for tank management cleaning and discharged. 00 200 0 Water management is an important responsibility, especially the quality and quantity of discharge to
00 surface water. We are committed to responsible water-care systems at our terminals. The objective is to make a clear distinction between flows of good quality water (i.e. clean rainwater) and contaminated water. 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
The principle is that clean water should remain clean and not be mixed with process water, while The energy consumption of our conventional liquid bulk storage and handling operations is used for the process water will be treated in a water treatment plant. Water used during operations is recycled production of steam for heating purposes (gas consumption) or through electricity consumption for through a water treatment plant (at or outside Vopak) before release into surface water or sewers. powering our pumps and, to a lesser extent, for heating and cooling. The amount depends on (1) the products we store for our customers, (2) the weather conditions and (3) the amount of product pumped Vopak has developed a modular model for the engineering and optimizing the design of wastewater (electricity consumption). Energy consumption for our LNG operations and other cryogenic gasses is treatment plants. This model is based on local legislation and the amount and composition of the significantly higher than our conventional liquid bulk storage and handling operations. For more details wastewater that needs to be cleaned. Next to this engineering tool, we are supporting the on the impact of our LNG operations, reference is made to Note 11. Our impact on climate developments of new innovative wastewater cleaning techniques. change: GHG emissions.
Short-term energy-saving programs focus therefore on improving the processes of heat exchange and efficiencies within the system.
We are driving various efficiency improvement projects in different parts of our network. As heating is a large component of our energy consumption, we are looking for methods to reduce our energy consumption for this purpose. Some of the examples are: • The energy-efficiency program in the Netherlands (reduction of the energy consumption with 8% in 2017-2020) which will serve as a blueprint to increase our energy efficiency around the globe • Ongoing program for insulating our tanks • In December 2020, we announced that Vopak Solar Park Eemshaven is starting construction of its solar park. According to the current planning, the first green power will be supplied to the electricity grid in the third quarter of 2021 • We also conducted a successful pilot with solar foil at our terminal in Vlaardingen (the Netherlands) and will extend this in 2021 too • Installation of industrial LED lighting.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our environmental & climate impact (planet) 83
Note 18. Waste Note 19. Circularity
a op a a a o Circularity for Vopak is to minimize the waste and to maximize the reuse of waste of construction, operating and demolishing our assets, in such following the Cradle to Cradle principles. Waste This refers to the amounts of hazardous waste streams that are not reused by the customers. This flow is, in general, less than 10% of the total amount. 1. Design for the future: We are incorporating (new) digital technologies in our design process. Further we are bound by our standards to the right materials, to design for appropriate lifetime and for extended future use. This is embedded in the Vopak way standards and our – repeatable formula, where we define In addition to the waste water as described in Note 17. Water management, during operations there are the building blocks for our assets. several types of waste: 2. Supply: We work together throughout the supply chain, internally within organizations and with the • Hazardous waste: Slobs and residual products from tanks, pipelines. Each time a tank is empty, public sector to increase transparency and create joint values, as laid down in our- supplier policy. a (small) amount of residual product, contaminated with other material (such as water), remains. 3. Use of assets: While assets are in use, we will maintain, repair and upgrade our assets to maximise This product is mostly returned to the owner of the product. The remaining part is treated as chemical their lifetime. waste by specialized waste treatment companies away from our terminals. 4. Demolition of assets: We have a system in place to reuse the main materials of our assets, such as • Industrial waste: Generated by means of maintenance and/or demolition. Demolition waste, steel and concrete. e.g. steel from the tanks is directly recycled by the contractor. • Soil remediation waste: Contaminated soil transported out of the Vopak site for treatment and Refer to Note 21. Innovation for more details on our investment in Xirqulate that supports a replaced by clean soil. Further reference is made to Note 14. Soil and groundwater pollution. circular economy. • Household waste Normal garbage waste generated by offices.
All waste has to be treated according to the Vopak Way Standard on Waste Management, even when the terminal’s host country requires a lower standard.
For every source of waste, Vopak has currently specific standards/procedures: • Spills to soil: Every spill that occurs at a terminal must be cleaned immediately and the contaminated soil disposed of; • Residual waste management: When tanks change service to another product, small amounts of product may remain in the tanks and pipelines. This is currently treated as chemical waste and treated by specialized companies. However, in some instances we make use of companies that can upgrade residual waste into a product with a value; • Slops: When tanks are cleaned for inspection, residual waste (called slob) has to be removed from the tank and processed elsewhere. Our aim is to recollect as much as product as possible and transfer that back to our customer. On average (1/3) is transferred back to the customer and (2/3) is to be processed elsewhere (mostly incinerated); • Sludges from our waste water treatment plants; • Demolishment of assets: old assets (mainly Steel & Concrete), which are recycled).
Vopak Annual Report 2020 Care for our economic impact (profit) Care for our economic impact (profit)
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 84 Care for our economic impact (profit)
Sustainability is about caring for people and the planet while sustaining profit. This means innovating, bringing in new digital technologies, transforming our company and holding the course we set out in previous years, while living the Vopak Values and staying true to our business ethics. Through our storage and handling services, the payment of taxes, dividends for shareholders and salaries for employees, we create economic value.
Value creation capital Input Output & Outcome Impact Knowledge We have company-wide standards. Our processes and systems We work to continuously strengthen customer service and improve ensure we handle products efficiently and safely. In our core areas, the efficiency of our systems and processes. To support this, we are we also develop our own software. digitizing more of our operations.
Financial Our shareholders and creditors provide funds. We rely on these We generate cash flows from our business. We use this to operate funds to invest in our business, expand storage capacity, and our terminals and invest in new growth; we also pay interest to our explore new opportunities for growth. creditors, tax and dividends to our shareholders, as well as salaries and benefits to our employees.
Manufactured We operate a network of terminals around the world. These include We maintain our terminals and other facilities – and invest in storage tanks, pipelines, jetties and other facilities. It is this network new storage capacity to open up flows of product to areas of that enables us to move products and connect up supply and high demand. demand.
People Employees provide their time, expertise and knowledge. We also We develop our people, train them in new skills, motivate them, use contractors and other service providers in our operations. We and aim to provide a healthy and safe working environment for both invest in training and talent development to build a skilled, diverse employees and contractors. workforce.
Social & Relationships To carry out our business, we rely on relationships with As Vopak, we handle often hazardous products with care. stakeholders. These include our customers – in addition to our We ensure safe delivery of these products to our customers, employees, suppliers, business partners and governments. We also providing a vital link in the supply chains for oil, gas, chemicals and need the continued goodwill of the local communities in which vegoils. We facilitate novel clean(er) products through appropriate we operate. Together, these relationships provide our ‘license to infrastructure.
operate and grow’.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 85
Note 20. Business ethics and integrity In 2020 we have incorporated many learnings to our HR system (MyPulse) including learnings related to the Code of Conduct, Privacy Code, Sanctions Compliance, etcetera. As MyPulse allows us to reach all Definition, reporting policies and boundaries Vopak employees this contributes in making sure all employees perform quality learnings in a timely manner. a op a a a o Completion of Code of Conduct training Business ethics Ethical behavior refers to behavior in accordance with the Vopak Values In 2020, 88% of all employees in MyPulse (excluding joiners in the last two months) have completed and integrity and Code of Conduct, including anti-corruption and anti-bribery, compliance with legislative regulations, prevention of fraud and political funding. company-wide training on all aspects of the Code of Conduct, including anti-corruption as per end of December 2020 (2019: 90%).
Reporting policies Incidents of discrimination, fraud, corruption and bribery All significant fines and non-monetary sanctions for non-compliance with laws and/or regulations in the In 2020, 47 whistleblower cases (2019: 23) were reported to the confidential officer. All whistleblower societal, environmental and economic area are reported. cases were followed up and reported to the Executive Board and Supervisory Board. Appropriate action was taken, including further strengthening of internal controls where necessary. There were three Boundaries alledged cases of discrimination reported during 2020, however no supporting evidence was found for Data in this note includes information for all in-scope entities as noted in Note 1. Basis of preparation. any of these three cases (2019: none). A total of six cases of fraud (2019: 13) have come to the attention of the company. None of the fraud cases have had a material financial consequence. All our employees Management approach are required to adhere to our anti-corruption and anti-bribery policy and our Code of Conduct. In order to fulfill our role in society, we consider it vital that employees, contractors, suppliers and joint venture partners understand and share our Vopak Values, i.e. Care for Safety, Health & Permit violations Environment, Integrity, Team Spirit, Commitment and Agility. We expect them to act accordingly In general, permit violations and fines are related to three compliance issues: when conducting business. • Non-compliance with operating permits (or expired permits) • Non-compliance with environmental regulations and/or limits The company encourages employees and other stakeholders to raise any concern or doubt they • Non-compliance with safety regulations. may have with regard to business conduct. In the case of employees, this can be with their direct manager. External parties can contact the Vopak contact person or the designated Trusted Person In 2020 no permit violations resulted in fines. In 2019 one permit violation resulted in a minor fine (via mail: [email protected]). Concerns raised are addressed with care, confidentiality of EUR 217 (spill to water). and respect.
We do not pay contributions to any political party nor related purposes, worldwide.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 86
Note 21. Innovation Note 22. Climate impact on Vopak
a op a a a o Introduction We acknowledge the Intergovernmental Panel on Climate Change (IPCC) assessment Innovation Innovation relates to the digital that human influence is clear and physical impacts are already being felt. There is a growing transformation of the company, as well as other innovations that need for governments, business and citizens to adapt to and mitigate the impacts and improve efficiency, safety and logistics. risks of climate change.
In this note we aim to provide transparency about the potential impact of climate change on both By innovating and bringing in new digital technologies, our aim is to improve our services to the Vopak’s physical assets and our business activities, by disclosing the information on our efforts in line customers, operational performance and getting ahead of the energy transition and climate change. with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD). Over the period 2017-2019, we invested EUR 93 million in new digital technology, innovation programs and replacing legacy IT systems and within the set ceiling of EUR 100 million. During 2020, we For the impact of Vopak on climate change, reference is made to Note 11. Our impact on climate continued the execution of our IT modernization program by investing EUR 44 million. New technologies change: GHG emissions. will drive further improvements in customer service, efficiency and safety. For more details, reference is made to Technology leadership. Governance, strategy and risk management The determination of threats and opportunities driven by climate change forms an integral part of Our Moves program, in which we renew our IT landscape, is being implemented. We expect both the company’s strategic planning cycle. Our governance with regard to climate-related risks and service and efficiency benefits as a result once rolling out new systems and functionality. For further opportunities is integrated into our governance and risk management processes. For more information, information, reference is made to Service leadership and Technology leadership. reference is made to the Governance, risk and compliance chapter.
In 2020, we announced investments in amongst others: Our journey on addressing climate-related risks and opportunities for Vopak • a new solar energy park adjacent to our terminal at Eemshaven in northern Nederlands (jointly with Since 2014, we assessed the risks and opportunities related to climate change as part of the partners Whitehelm Capital and Groningen Seaports). According to the current planning, the first sustainability program and reported on this in our Annual Report. green power will be supplied to the electricity grid in the third quarter of 2021. • Xirqulate, which uses a proven technique that converts low-calorific residual flows and high-calorific In 2017, we started using the TCFD framework in our reporting. In 2018 and 2019, we conducted waste flows into a clay substitute as a secondary raw material for the ceramic industry or as an our Climate Day to stress test our strategy, including growth and our asset portfolio against the additive in concrete products. International Energy Agency (IEA) scenarios (transitional) and the IPCC scenarios (physical). In 2020, we again conducted our Climate Day, together with our Strategic Committee and external guest Vopak embraces the energy and feedstock transitions. This is why we are developing partnerships and speakers, with the purpose to stress test our strategy, including growth and our asset portfolio exploring ways to facilitate the introduction of new technologies, processes and products to advance a against physical and transitional climate-change impacts. We went through updated IEA scenarios sustainable, low-carbon future. For more details, reference is made to Leading assets in leading and performed a more in- depth analysis on the higher risk areas for physical impacts. More details locations and Technology leadership. are included on the next page.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 87
Climate-related risks and opportunities • Rising sea levels possibly affecting our operations in Gulf Coast (US) and Jakarta (Indonesia) The risks and opportunities may be categorized into the following segments: • Rising sea levels and drought possibly affecting our operations in Sydney (Australia) and Spain • Transition: this includes changes in market dynamics, policy actions, reputation and new technology • Smog and extreme heat possibly affecting health and operations in Canada and California (US). and product developments • Physical risks: this includes acute risks such as increased severity of extreme weather events and The more in-depth analysis on these higher risk areas for physical impacts learned us that: chronic risks such as rising sea levels, temperature and precipitation changes. • The intensity of events is expected to be increased, mainly for storms and hurricanes in the Gulf of Mexico, South China and Southeast Asia, however the number of events is not expected to rise Transitional risks and opportunities • In addition there is a higher risk for possible damage and business interruptions from sea level rise in
The international commitment to combat climate change and lower CO2 emissions is having a profound Singapore straits and Indonesia, coastal erosions in Vietnam and increased exposure to swell and impact on energy markets and industries. This development represents risks for Vopak, as most of our jetty outage in Western Indian Ocean. current business relates to fossil-based products. At the same time, we see tremendous opportunities, given the fact that the daily and seasonal fluctuations in wind and solar energy are likely to increase the The consequence of these potential developments could be an increase in (preventive and maintenance)
need for storage of low-carbon and clean energy sources like hydrogen, as well as CO2 storage investments, an increase in insurance costs for these areas. These concerns not only Vopak, but also solutions, pipeline infrastructure and new technologies. other actors in affected port areas. Therefore, we will engage with these stakeholders and strive to stay ahead with the developments. In the 2020 stress-testing with the 2020 IEA scenarios and assessing policy developments around the world learned us that the main insights compared to 2019 are: Our response to potential risks and opportunities on Vopak • COVID-19 disrupted GDP growth, energy demand and global emissions resulting in new energy Based on the stress test and subsequent analysis in 2020, we are confident that our strategy sufficiently scenarios addresses both the risks and opportunities arising from the physical effects of climate change, as well as • In all scenarios, renewable energy will grow considerably and demand for coal will decline those related to the transition to a low-carbon economy. We will continue to aim for growth acceleration • Demand outlook for coal, oil, gas and renewables will depend on policy setting and investments. in the chemical and gas markets. In addition, we engage in developing opportunities to facilitate Gas is seen as a much needed transition fuel to be able to reduce especially coal low-carbon solutions for a sustainable energy future. In this respect, we defined seven lines of action to • The energy mix in OECD countries will move away from fossil to renewables – whereby policy play our role in the energy transition: setting drives the speed of the transition. Energy demand in non-OECD countries will grow strongly 1. Switching to cleaner and/or renewable fuels with fossil energy needed to support this growth 2. Energy efficiency through smarter process operations • Governmental policies, public opinion and ‘black swan events like COVID-19’ will continue to have an 3. Minimize commercial incentives to increase our carbon footprint impact on the energy scenarios going forward and the speed of which transitions take place. 4. Develop and use renewable energy 5. For new terminals, heating and vapor treatment equipment should be based on carbon neutral The speed of change increases with a lower peak in energy demand and an enhanced role for technology where possible renewables. IEA scenarios are aligned with Vopak’s strategy to transform the portfolio towards gas, 6. Introduce internal carbon pricing in investment proposals chemicals, cleaner fuels and grow our industrial terminal activities. 7. Carbon capture, storage and reuse of Scope 1 emissions.
Physical risks and opportunities Our ambition is to further develop our business in support of the Paris climate goals. We welcome and To assess the physical climate-related risks, in 2020, we re-assessed the 2019 outcome of the potential support the new initiatives to improve and drive the convergence of standards and practices in business impact of three IPCC scenarios for 2050 (RCP 2.6, 4.5/6.0, 8.5), which are based on global warming of disclosures related to climate risks, such as the recommendations of the Financial Stability Board’s Task respectively 1.5 degrees, 2 degrees, 3 degrees and 4.5 degrees Celsius. The sensitivity analysis Force on Climate-related Financial Disclosure (TCFD). We will continue to engage with investors and demonstrated potential acute and chronic impact on our current assets in the following areas by 2050: other stakeholders in order to further improve our disclosures of material climate-related risks and • Possible damage and business interruptions from storms and hurricanes in the Gulf of Mexico, opportunities, taking into consideration the recommendations of the TCFD and other South China and Southeast Asia relevant developments.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 88
Note 23. Our responsibility towards taxation • Reliability and efficiency are key in Vopak’s service offering. As Vopak and its customers are continuously faced with customs and other duties during primary processes, Vopak aims to achieve a op a a a o reliable, fast and cost-efficient handling of customs and other duties without disturbing primary processes, when possible by applying for an Authorized Economic Operator qualification or standards Taxation This refers to the transparency of Vopak’s reporting on tax and its responsibility set for non-EU equivalents towards taxation. • In ensuring and further improving the accuracy and reliability of all its tax and customs processes and the related tax reporting, Vopak strives to make use of innovative information technology to the Vopak’s Global Tax policy, which includes the company’s tax strategy, views taxation as an integral part of extent that there is a proper balance between the investment and the return. Examples are the use the business and as an important contributor to Vopak’s position in the marketplace and to society, by of XBRL filings and data analytics reflecting the company’s attitude towards taxation as part of its corporate social responsibility towards a • Vopak maintains and builds mutual professional and respectful relations with local tax wide range of stakeholders. As such, tax is an integral part of the company’s sustainability policy. authorities based on open and transparent communications both verbal and in writing. Where possible, Vopak aims to enter into cooperative compliance programs (e.g. In the Netherlands, the Vopak’s Global Tax policy includes the following elements company participates in the ‘Horizontaal Toezicht’ program, which is a cooperative compliance • Vopak’s business strategy is leading: Vopak aims to achieve an effective tax rate that does not program with the Dutch tax authorities) and obtain upfront certainty, but only when fully in line with exceed the weighted average statutory tax rate by avoiding double taxation, that does not trigger Vopak’s Tax policy principles and Vopak Values anti-abuse regulations and that does not result in losing loss utilization opportunities. In addition, • To support the above, ‘tax surprises’ are unwanted (irrespective whether positive or negative) as Vopak aims to optimize the use of tax incentives and investment schemes for the purposes for which these could have a financial and reputational impact. Tax risks not aligned with the company’s risk these have been designed. By following these principles, it is ensured that Vopak commits to its appetite are undesirable. Tax risk management and management of tax opportunities are embedded corporate social responsibility. In striving to achieve this goal, Vopak will only optimize real business in the (tax) control framework as well as in our enterprise risk management process. Adherence to structures and transactions and will not set-up legal entities or transactions solely for the purpose of the company’s risk appetite is also monitored by, among other, the Global Risk Committee tax savings or tax avoidance. The business strategy is leading. Vopak acts in line with the letter and • Vopak will always adhere to the Vopak Values when executing its tax policy. In the unlikely situation the spirit of the law that ‘ethical dilemmas’ regarding tax occur within the Group, these are dealt with in accordance with • Vopak aims to fully comply with laws and regulations in technical and procedural matters. the Vopak Values, the Company’s Code of Conduct and the Global Tax Policy. Observed tax dilemma’s Tax positions benefiting Vopak are only taken when sufficiently substantiated. Intercompany which are not aligned with the Vopak Values, are required to be reported via the whistleblower line, in transactions are conducted ‘at arm’s length’ adherence with the whistleblower policy of Vopak. Such dilemmas did not occur in the years reported • When possible and allowed by laws and regulations Vopak aims to minimize its cash tax to free up on. On a regular basis, all Vopak staff is trained on the Vopak Values. As part of the informal ethical funds for sustainable and long-term growth. This is achieved, for example, by making use of tax dilemma dialogues throughout the year, tax is addressed as a standard topic. This approach ensures deferral facilities and other facilities which have been established by the authorities to encourage that our staff is sufficiently equipped to identify and address tax dilemmas when encountered. such investments • As a principle Vopak does not use ‘tax havens’. Vopak will only have entities in countries perceived The tax policy applies to all countries where Vopak operates and where it is able to control adherence to as ‘tax havens’, when real economic activity takes place in the country. In the rare situations this policy. The Global Tax policy serves as guidance for Vopak Board Members in joint ventures and where an entity in a ‘tax haven’ is acquired as part of a larger transaction, Vopak will assess associates. Adherence to the Global Tax policy is monitored by the Global Tax department supported by whether the entity meets the requirements of the Global Tax policy and will take appropriate actions other Global functions where relevant. For operating companies where the company has joint control or where necessary only significant influence, the company strives to apply the concepts of the tax policy as it cannot • Taxes that are merely collected by Vopak should not impact profit or interfere with the unilaterally enforce compliance. day-to-day business. Automation of these collecting activities should be maximized for the purpose of efficiency improvement and cost reduction The Global Tax policy was further updated and approved by the Executive Board and implemented in 2017. Developments during 2020, did not give rise to an update of the tax policy.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 89
Vopak’s approach to tax has been discussed with our stakeholders as part of the stakeholder Including exceptional items Excluding exceptional items engagement dialogue. For more information on this dialogue, reference is made to Note 2. From Statutory Effective Statutory Effective stakeholder engagement to materiality. This dialogue did not result in a revision of the Global Tax policy. tax rate tax rate tax rate tax rate Vopak complies with the requirements for country-by-country reporting. As IFRS requires that the Vopak Americas 25.2% 46.6% 24.8% 30.0% Group is consolidated in the financial statements of HAL Holding N.V. (HAL), a company listed and of which: traded on Euronext in Amsterdam, Vopak is not entitled to file its own company country-by-country United States of America 21.0% 28.7% 21.0% 28.1% report with the tax authorities and has provided the required information to HAL. HAL has confirmed to Mexico 30.0% 42.1% 30.0% 42.1% Vopak that it filed the HAL country-by-country report, which includes the Vopak information. Asia & Middle East 21.1% 15.1% 21.1% 15.1% In December 2019, a new GRI Standard, GRI 207: Tax 2019, was released that comes into effect from of which: 1 January 2021. This new standard enables organizations to better understand and communicate Australia 30.0% 28.8% 30.0% 28.8% information about their tax practices publicly. Vopak has the ambition to apply the principles of this GRI Singapore 17.0% 19.0% 17.0% 19.0% standard in the coming years and is currently in the process of assessing how to do so and start an implementation project. At the same time it is observed that many of the principles of this new standard China & North Asia 24.8% 4.7% 24.8% 4.7%
are already applied by the company. Europe & Africa 28.1% 49.6% 24.0% 24.8% of which: Effective tax rate per main country Netherlands (incl. head office) 25.0% 0.5% 25.0% 0.6% Vopak pays a fair tax in the countries in which it operates. The largest operations are located in the Belgium 25.0% 33.5% 25.0% 33.5% Netherlands, Singapore and the United States. LNG 22.6% 0.0% 22.6% 0.0% For an overview of the effective tax rate per main country per (geographical) division, reference is made Total Vopak 23.3% 18.1% 23.3% 17.3% to the table right and the Financial performance chapter where a narrative explanation on the effective tax rate for the year is provided. For more information on the segments and other financial information per segment, reference is made to Note 2.1 of the Consolidated Financial Statements. The effective tax rate -excluding exceptional items- based on the proportional financial information For more information on the total tax position and tax charge of the Group (including the weighted was 27.8% (2019: 22.5%). For more information, reference is made to the Statement of income in average statutory tax rate and the mandatory effective tax rate reconciliation), reference is made to the chapter Non-IFRS proportional financial information. section 8 of the Consolidated Financial Statements. Tax risk and tax risk management Effects of the joint ventures and associates on the effective rate The principal risks of Vopak and the mitigating actions applied by management are disclosed in this As the Group extensively operates via investments in joint venture and associates, which fall under the Annual Report. Although the company has no principal risks relating specifically to tax, tax is an integral Dutch participation exemption, and of which the profits have been taxed in the country of establishment part of the risk management process of the company. For an overview of the principal risks of the while the net profits of these entities are part of the EBIT(DA) of the Group, the effective tax rate of the company, reference is made to the section Risk management and internal control in the Governance, Vopak Group is per definition always lower than the weighted average tax rate of that of its subsidiaries. risk and compliance section.
To obtain a proper insight into the economic effective tax rate of the Group, including the tax paid by the Furthermore, Vopak’s Key Control Framework has a dedicated section stipulating the internal controls, joint ventures and associates, reference is made to the Non-IFRS proportional financial information that which address the risks related to tax and which enforce compliance with the global tax policy. is included in the Additional information section.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 90
The In-control statement by the Executive Board, as included in this Annual Report, is based on the New energies & innovation effectiveness of Vopak’s internal controls, including those relating to tax. For more information, including Currently, we are participating in several feasibility studies to explore the potential of hydrogen as a the involvement of Global Internal Audit in the monitoring of the effectiveness of internal controls, source of low-carbon energy for the industry and power sector in the Netherlands and elsewhere, reference is made to section Risk management and internal control in the Governance, risk and including through the H-vision project in Rotterdam and the Institute for Sustainable Process Technology compliance section. (ISPT). We are also a supporting member of the international Hydrogen Council and the Dutch H2Platform, while exploring other possible partnerships to develop new hydrogen supply chains,
Assurance on tax and tax related matters CO2 infrastructure and services, new feedstocks and flow batteries. In line with the principle that taxation is an integral part of the business, Vopak did not request its auditor to provide separate assurance on tax. Nevertheless, compliance with relevant tax laws and the related We also engage in dialogues and studies about sustainability, climate change and the energy transition accounting is a material item in our financial statements, which is covered by an unqualified audit opinion as part of the Clingendael International Energy Program (CIEP), the International Energy Forum (IEF), included in the Independent auditor’s report. In addition, this Note on ‘Our responsibility towards the World Energy Council (WEC) and the World Economic Forum (WEF). taxation’, is part of our sustainability information on which limited assurance is provided by our auditor via a separate assurance report. For more information on the assurance level provided by our auditor, In the field of innovation, our partnerships include SmartPorts, which supports the port of Rotterdam in reference is made to the Independent auditor’s report included in the section ‘Financial statements’. its ambition to develop into Europe’s leading port and industrial complex of the future, as well as PortXL and iTanks, fostering innovation in the port and accelerating startups. The company is of the opinion that the current assurance levels provided by the external auditors on all material tax and tax related matters are sufficient and that a separate tax audit would not lead to a We have set up Vopak Ventures to identify investment opportunities in start-ups and scale-ups in new material increased level of assurance compared to the current situation. technologies and emerging value chains. We focus on two areas: Sustainability and Digitalization. For further information, reference is made to Leading assets in leading locations and the CEO Statement. Effectiveness of internal controls and control environment related to tax In line with the principle that taxation is an integral part of the business, no separate in-control statement We value these platforms and partnerships, as we realize that they are becoming increasingly important is provided by the Executive Board on tax. However, as tax is a material item within the Group the to keep our company relevant, healthy and fit for the future, and help us deliver on our commitment to Executive Board declaration by definition also covers the tax processes of the Group. continue storing the vital products that society will need tomorrow.
Note 24. Participation and partnerships Industry associations Our memberships of industry associations include, but are not limited to: Vopak participates in numerous forums, industry associations, think tanks and research institutes, • The Dutch and European associations of tank storage companies (VOTOB and FETSA) that aim in technical working groups, corporate networks and public-private partnerships, at local, national, regional particular to lift industry safety standards; various national and regional associations of the chemical, and international levels. These partnerships and memberships help us to stay tuned to changing gas or petrochemical industries stakeholder demands and societal needs, signal new laws and changing market conditions, share best • Technical affiliations like the Chemical Distribution Institute – Terminals (CDI-T) practice and learn from other individuals or organizations. They also allow us to participate in international • The Oil Companies International Marine Forum (OCIMF), a voluntary association of oil companies and national debates on policy issues, to contribute to the energy transition, for example, and to support with an interest in the shipment and storage of crude oil, oil products, petrochemicals and gases our own internal digital transformation. • The Engineering Equipment and Materials Users’ Association (EEMUA) • The Nederlands Normalisatie Instituut which sets guidelines and technical standards in the Netherlands (NEN) • A sub-committee of the World Association for Waterborne Transport Infrastructure (PIANC), where we helped design technical guidelines for marine terminal infrastructure.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Care for our economic impact (profit) 91
External benchmarks Participation in various benchmarks, as well as feedback from the organizations behind them, also trigger reflection and action on sustainability topics. Although benchmarks certainly have a clear added value, completing questionnaires requires time and effort that cannot be devoted to other activities. We, therefore, decided to limit our active participation to benchmarks that are either leading at a global level or relevant in a local context (these are detailed in the table below).
Benchmark Brief description Rating Strengths Weaknesses MSCI ESG Rating MSCI ESG Ratings assess a company’s performance April 2020: AAA based on environmental, social and governance (ESG) August 2019: AAA themes, focusing on key ESG issues identified for the industry. (rating scale: CCC to AAA)
Sustainalytics The ESG risk rating measures a company’s exposure July 2020: 19.1 • Environmental performance • Community relations to industry-specific material ESG risks and how well July 2019: 23.1 (carbon emissions & environmental • Waste reduction a company is managing those risks. impact, land use & biodiversity) (0 = Low exposure, 50 = High exposure)
ISS ISS QualityScore is a data-driven scoring and screening Score as per January 2021: • Audit & risk oversight • Shareholder rights solution designed to help institutional investors (1) to Environmental: 3 (Jan 2020: 2) • Environmental risk & opportunities • Waste & toxicity review a company’s governance quality and assess risk Social: 3 (Jan 2020: 2) • Labour, health & safety and (2) to measure and identify areas of environmental Governance: 2 (Jan 2020: 2) and social risk through . (10 = High risk, 1 = Low risk)
CDP CDP represents institutional investors; its aim is to offer December 2020: D (climate), C (water) • No targets on reductions of GHG transparent guidance to investors on climate-related February 2019: F (climate) emissions and waste opportunities and risks for companies. (rating scale: F to A)
EcoVadis EcoVadis operates the first online platform providing December 2020: pending review • Labor practices • No information on reporting on Supplier Sustainability Ratings for global supply chains December 2019: 59 sustainable procurement issues that enables companies to monitor the CSR • No third party due diligence on performance of their suppliers worldwide. EcoVadis ethics issues analyses CSR policy, implementation and performance • Environmental fines during the past with respect to environmental and social aspects, 5 years in the area of ethics and supply chain responsibility. (rating scale: 0 – 100)
NL Transparency Benchmark The Transparency Benchmark is a biennial study by the November 2019: 74 (scale 0 – 100) • Governance • Stakeholder management Ministry of Economic Affairs and Climate and the Dutch November 2017: 129 (scale 0 – 200) • Communication on issues • Impacts of value creation Professional Association of Accountants (NBA) into the • Environmental policies • Limited instead of reasonable assurance transparency of corporate social reporting at Dutch (0 = Low, 100/200 = High) • Reporting on CO2 in the supply chain companies. Bi annual
VBDO Tax The Dutch Tax Transparency Benchmark provides July 2020: 26 • Define and communicate • Disclosure of country-by-country tax an overview of Dutch stock listed companies’ fiscal November 2019: 26 a clear strategy • Tax assurance transparency and is based on the principles for good • Respect the spirit of the law. tax governance. Each principle is further separated Tax-compliant behaviour is into various elements and converted into measurable the norm criteria. These measurable criteria are tested against • Know and manage tax risks publicly available information on tax payments. (rating scale: 0 – 35)
Vopak Annual Report 2020 Governance, risk & compliance Governance, risk & compliance
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
93 Supervisory Board report 97 Supervisory Board members 98 Executive Board members 99 Remuneration report 108 Corporate Governance 112 Corporate Governance statement 115 Risk management & internal control 128 Shareholder information Governance, risk & compliance
Vopak Annual Report 2020 Supervisory Board report Supervisory Board report
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Supervisory Board report 93 Supervisory Board report
Supervision financial performance, financing of the company, corporate responsibility and succession planning for The Supervisory Board oversees and advises the Executive Board in performing its management tasks senior management. and guides the company’s operational and financial development. In performing their duties, the members of the Supervisory Board are guided by the interests of Vopak and all its stakeholders. The Supervisory Board discussed and approved the 2021 budget, quarterly reports and numerous investment proposals related to greenfield projects, expansions at several existing locations and During 2020 the Supervisory Board held six regular meetings, one face-to-face meeting and five video acquisition opportunities. An important attention point this year was the acquisition of three industrial conference meetings due to the Covid-19 restrictive measures. Also five additional meetings were held terminals from Dow on the US Gulf Coast together with BlackRock’s Global Energy & Power to discuss the business impact of the Covid-19 pandemic and corresponding measures taken by the Infrastructure Fund . The Supervisory Board also reviewed the progress of ongoing projects and the company as well as two investment proposals. All of these meetings were held jointly with the full portfolio of new projects. Executive Board present. Almost all plenary sessions of the Supervisory Board were accompanied by an executive session with the CEO in attendance and by a session held solely between the members of The global economic contraction caused by the Covid-19 pandemic has impacted the company in many the Supervisory Board. Between meetings, the Chairman of the Supervisory Board had regular contact ways. Since the start of the pandemic, the developments have been closely monitored. Scenario based with the CEO to discuss the current state of affairs of the company and to prepare for meetings. contingency plans and other mitigating actions were prepared and significant room was created for management to intervene if and when considered necessary. There were limited consequences for the In 2020, the average attendance at the regular and additional meetings combined was 97%. operations with no significant disruptions to business continuity, confirming the relative resilience of the company to the crisis. Overall the existing governance structure of the company has proven to work well. Strategy is one of the Supervisory Board’s main priorities and is an integral part of its considerations and decision making processes. In 2020, a session spread over two days was fully dedicated to discuss External auditors were present at two meetings of the Supervisory Board in which the annual results the execution of the Vopak strategy with the Executive Board centering around growth, competitive and half-year results were discussed. The interim report and auditor’s report issued by the external efficiency and the application of innovative technologies aimed at long-term value creation. Other topics auditors were reviewed during these meetings. The minutes of all the meetings of the Audit Committee, discussed during the strategy session were sustaining capex and gases next to the opportunities pursued Remuneration Committee and the Selection and Appointment Committee were shared with and in new energies and digital innovations. By means of an in-depth and permanent dialogue, the Supervisory reviewed by the Supervisory Board. Board is constantly involved in developing, regularly monitoring and evaluating the company’s strategy. For instance, new business opportunities are always assessed against their strategic rationale and the principal The Supervisory Board discussed the operation of the company’s risk management and control systems. risks both for the short and long-term are evaluated thoroughly. Choices proposed by management In the absence of the Executive Board members, the Supervisory Board discussed the performance of can thereby be challenged and the underlying arguments weighed against each other. the Executive Board and the proposal by the Remuneration Committee for the remuneration of the Executive Board. The Supervisory Board approved the strategy as being effectuated by the Executive Board. The fundamentals of the current strategy are considered still being valid and a refined look has been taken to determine the The Supervisory Board evaluated its own performance in 2020 and that of its committees. In preparation strategy ambitions for the period after 2020. In executing the strategy, the company will make clear choices and as part of the self-assessment procedure, each member completed a questionnaire. Observations in while continuing to allocate the available capital in the right manner and to the right locations. regard to the functioning of the Supervisory Board, its relationship with the Executive Board and other stakeholders of the company were hereby taken into account. This was discussed and assessed by the During its 2020 meetings, the Supervisory Board discussed a number of recurring topics at each Supervisory Board. Main topics and conclusions of the evaluation related to the effectiveness of the meeting. The Supervisory Board lends particular importance to sustainability (safety, environment and Supervisory Board in fulfilling its tasks, the effectiveness of the committees and of the individual people) in its discussions. Other topics included the company’s operational and financial objectives and members. Where necessary required actions were taken. The relationship with the Executive Board
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Supervisory Board report 94
and engagement with the organization were also included in the evaluation process. The outcome of including whistleblower cases. The Remuneration Committee primarily makes recommendations regarding the evaluation process showed that it meets the governance requirements. The self-assessment gives the remuneration and the remuneration policy of the Executive Board and the Supervisory Board. insight in how the Supervisory Board effectively functions and contributes to the corporate decision making process. This includes the so-called softer issues. Certain boardroom challenges were identified Audit Committee in the self-assessment that can further improve the performance of the Supervisory Board and that will The Audit Committee met five times in 2020. The attendance rate was 100%. All meetings were encourage and support the Executive Board in its efforts to create an inclusive and safe culture attended by the CFO, the Global Director Control and Business Analysis and the Global Director throughout the organization. Internal Audit.
Composition of the Supervisory Board The external auditor was also present at all of these meetings. The Audit Committee discusses with the The Supervisory Board currently comprises six members: Mr Noteboom (Chairman), Mr Groot external auditor at the end of the meetings for the half year and full year, without management being (Vice-Chairman), Mrs Foufopoulos – De Ridder, Mrs Giadrossi, Mr Van der Veer and Mr Zwitserloot. At the present, its assessment of Vopak’s activities, risk assessment and internal control systems as well as AGM to be held on 21 April 2021, Mr Richard Hookway is nominated to be appointed as member of the collaboration with the Executive Board and the organization. Supervisory Board for a term of four years. As per the same date and in accordance with the resignation schedule, Mr Zwitserloot will step down from the Supervisory Board as he has reached his maximum term. A core task of the Audit Committee was to extensively review the financial reports and the budget before consideration by the full Supervisory Board. The Audit Committee also discussed topics related to Vopak’s For more information about the Supervisory Board members, reference is made to the Supervisory financing structure, analyses of the financial ratios, pensions, status of legal claims and proceedings, Board members paragraph in this report. tax matters, sustainability, IT and cyber security, fraud and whistleblowing reports, reports on the risks associated with the company’s operational, commercial, financial and other activities, compliance matters The Supervisory Board recognizes its own role in the company’s corporate governance structure, with as well as the company’s management reporting. It also discussed the dividend proposal, the share members receiving updates and information to adequately fulfill their roles and responsibilities. Ongoing buyback program in amount of EUR 100 million and the debt issuance in the US Private Placement market education is an important part of good governance. As part of the induction program, new members of of over USD 500 million equivalent. The company’s views on notifications from Dutch corporate governance the Supervisory Board visit various terminal locations and meet with divisional and local management. platform organizations and the Dutch regulator (AFM) were also reviewed. They also attend induction sessions at which they are informed about financial, reporting, internal audit, HR, commercial and business development, IT, legal and governance related affairs. The Audit Committee considered the 2020 audit plan of the external auditor and the Internal Audit department’s plan for 2021. Both audit plans were approved by the Supervisory Board. The main topics All Supervisory Board members, except for one, as permitted by the Code, qualify as independent in the of the external audit plan include the materiality levels, the audit scope, the key audit risks and the key meaning of best practice provision 2.1.7 of the Dutch Corporate Governance Code. Mr Groot does not elements of the audit approach as well as the auditor’s assessment of the risk of fraud within the satisfy all independence criteria. In 2020, there was no actual or potential conflict of interest between company. The audit reports from Internal Audit performed during 2020 and the progress realized in Vopak, any Supervisory Board or Executive Board member. implementing recommendations from audits, were also considered. The Audit Committee reviewed the risk management and internal control processes. It discussed the recommendations in the management The Supervisory Board has three committees: the Audit Committee, the Selection and Appointment letter and the relationship with the external auditor. Deloitte Accountants B.V. was nominated as the Committee and the Remuneration Committee. Their roles are described below in more detail. The external auditor of the company to audit the annual statements of the company for the financial year committees generate, review and discuss detailed information and prepare recommendations relating to ending 31 December 2021. their specific areas while the full Supervisory Board retains overall responsibility and always takes the final decisions. In each case, the Committee Chair reports the Committee’s main considerations and The Audit Committee monitored the independence of the external auditor. During 2020, non-audit findings to the full Supervisory Board, usually immediately after the relevant Committee meeting. services were not provided by the group’s external auditor but only audit or audit-related services were provided. The performance of the external auditor was assessed by the Audit Committee itself in which The Audit Committee assists the Supervisory Board in its responsibility to oversee Vopak’s financing, process satisfaction survey was used as conducted among the divisions, operating companies and financial statements, financial reporting, compliance and system of internal business controls, risk relevant global functions. This assessment included a consideration of the quality of the audit work, the management and audit findings. Non-financial topics are also reviewed as part of risk management expertise and composition of the audit team, the audit fee and the quality control within the audit firm.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Supervisory Board report 95
Finally, the Audit Committee assessed its own performance throughout the year and its regulations, Remuneration Committee supported by an extensive questionnaire that was discussed by all Audit Committee members. The The Remuneration Committee met three times in regular meetings in 2020. The attendance rate was Audit Committee’s performance met the requirements in all areas. During 2020, Mr Van der Veer acted 100%. In addition, the Committee held regular informal consultations and consulted professional internal as financial expert. and external advisors. For the following topics that recur annually, proposals were developed and submitted to the Supervisory Board for approval: Selection and Appointment Committee • The annual base salary and variable pay opportunities in 2021 The Selection and Appointment Committee is primarily tasked with advising on candidates to fill • The key performance indicators and target setting for the 2021 short-term incentive plan and the vacancies in both the Executive Board and the Supervisory Board. An important activity of the 2021-2023 long-term incentive plan Selection and Appointment Committee is also succession planning of senior management up to • The actual short-term incentive for 2019 (performance results and payout) and including the members of the Executive Board. The Selection and Appointment Committee met • The vesting of the long-term incentive plan 2017-2019 and the conditional awards of the long-term two times in 2020. incentive plan 2020-2022.
The attendance rate was 100%. During its meetings the Selection and Appointment Committee discussed In 2020 no material changes have been made to the Supervisory Board and Executive Board various relevant topics in detail. This includes diversity-related topics to ensure that the composition of both remuneration policies and this policy also encompasses the Shareholders Rights Directive II requirements. Boards represents a good balance in terms of diversity (including experience, gender, and nationality). With respect to the short-term incentive plan 2020 and the long-term incentive plan 2020-2022, Diversity in a broad sense continues to be a topic on the Supervisory Board agenda and is therefore the Remuneration Committee proposed to largely maintain the set-up. discussed by the Selection and Appointment Committee on a regular basis. In line with the company’s diversity program, the Supervisory Board supports the efforts of the company to strive for a global The Remuneration Committee conducted its annual comprehensive and in-depth analysis of the total workforce that is a reflection of society and to create a working environment where all employees feel compensation levels and individual components thereof, of the Executive Board, against the benchmark included. As part of its regular activities, the Selection and Appointment Committee discussed extensively, companies. The Remuneration Committee took into consideration various benchmarks and other market data, among others, the rotation schedule, the future composition of the Supervisory Board and the specific as well as information on pay developments of senior management of the company. The 2020 and proposed profiles of the Supervisory Board members. In 2020 the members of the Selection and Appointment 2021 remuneration packages of the Executive Board are well-positioned against relevant peers and: Committee performed on behalf of the Supervisory Board an evaluation of the effectiveness of the • have a focus on long-term value creation Executive Board members both individually as well as performing as a team in leading the company and • take into account the internal pay ratios within Vopak on a total remuneration basis implementing the strategy. This evaluation was performed in consultation with the Executive Board • are reflective of the outcomes of scenario analyses carried out to validate payout results. members and based on the Supervisory Board members’ own knowledge and opinions. The conclusion of this evaluation was positive and no major actions were considered necessary in view of the conclusions For the 2020 Supervisory Board and Executive Board policies and the proposals for the remuneration of the evaluations which conclusion was supported by the full Supervisory Board. of the individual Executive Board members, the Remuneration Committee took into account the requirements stemming from the Shareholders Rights Directive II, the Dutch Corporate Governance Code The recruitment process makes use of the specific profiles for the various positions within the Executive as well as shareholders expectations and views. The Remuneration Committee took note of the views Board and the Supervisory Board. These profiles are drawn up against the background of the full of the individual Executive Board members on the structure and amount of their total remuneration. The Executive and Supervisory Board’s profile. These profiles take into account the specific nature of the Committee also took notice of the views of other stakeholders, such as customers, suppliers, business company, its stakeholders and its activities. partners, authorities, the works council of Koninklijke Vopak N.V. and employees in general.
The desired expertise and background relating to economic, environmental and social topics are also The remuneration policies for the Supervisory Board and the Executive Board are designed in a manner considered. The process is aimed at maintaining a composition consisting of a well-balanced mix of that is reflective of the Vopak Values and to ensure full alignment with the company’s stakeholders competencies and experienced professionals who deal with key areas in an appropriate manner. External interests and expectations. These remuneration policies support the company’s purpose of storing vital search agencies are being engaged for the fielding of candidates for succession and nomination. products with care and being meaningful to society by ensuring safe, clean and efficient storage of products that are needed to meet the basic needs of people.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Supervisory Board report 96
For further details on the actual remuneration during 2020 and the shareholding positions of the 2020 attendance at regular Supervisory Board and committee meetings for the appointment period Executive Board and the Supervisory Board, reference is made to the Remuneration report. For further details on the remuneration policies, reference is made to the Vopak website. Supervisory Audit Selection and Remuneration Member Board Committee Appointment Committee Committee
The members of the Supervisory Board have signed the financial statements in order to comply with B.J. Noteboom 100% 100% 100% 100% the statutory obligation pursuant to article 2:101 paragraph 2 of the Dutch Civil Code. M.F. Groot 100% 100% 100% L.J.I. Foufopoulos – De Ridder 100% 100% 100% This year has been an extraordinary year for all Vopak employees also taking into account the Covid-19 N. Giadrossi 100% 100% 100% pandemic. The Supervisory Board would like to express its sincere appreciation to the Executive Board B. van der Veer 100% 100% and all Vopak employees for their dedication and hard work in achieving a successful 2020. R.G.M. Zwitsersloot 100% 100% The Supervisory Board very much appreciates all your efforts.
Rotterdam, 16 February 2021
The Supervisory Board B.J. Noteboom (Chairman) M.F. Groot (Vice-Chairman) L.J.I. Foufopoulos – De Ridder N. Giadrossi B. van der Veer R.G.M. Zwitserloot
Vopak Annual Report 2020 Supervisory Board members Supervisory Board members
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Supervisory Board members 97 Supervisory Board members
Mr Ben Noteboom (Chairman) Mrs Nicoletta Giadrossi Chairman of the Selection and Appointment Committee and Member of the Remuneration Committee Member of the Audit Committee Mr Ben Noteboom (Dutch, 1958) was previously CEO of Randstad Holding N.V. Mr Noteboom was first Mrs Nicoletta Giadrossi (Italian, 1966) was President of Technip Europe, Africa India, and Executive appointed to the Supervisory Board on 20 April 2016. His current term ends in 2024. He is a member of VP/Head of Operations Aker Solutions Asa. Mrs Nicoletta Giadrossi was first appointed to the Supervisory the Supervisory Boards of Aegon N.V. and Royal Ahold Delhaize. He is also chairman of Stichting Prioriteit Board on 17 April 2019. Her current term ends in 2023. She is Chairman of the Board of Cairn Energy plc Ordina Groep and board member of the Amsterdam Cancer Center. He owns 3,500 Vopak shares. and member of the Board of Falck Renewables SpA and Brembo SpA. She is also Senior Advisor of Bain Capital Partners and Chair of TecHouse A.S. in Norway. She does not own any Vopak shares. Mr Mel Groot (Vice-Chairman) Member of the Audit Committee and Member of the Selection and Appointment Committee Mr Ben van der Veer Mr Mel Groot (Dutch, 1959) is Chairman of the Executive Board of HAL Holding N.V. Mr Groot was first Chairman of the Audit Committee appointed to the Supervisory Board on 18 December 2014. His current term ends in 2022. He is a Mr Ben van der Veer (Dutch, 1951) was previously Chairman of the Executive Board of KPMG N.V., member of the Supervisory Boards of GrandVision N.V. and Anthony Veder Group N.V. Mr Groot is also until September 2008. Mr Van der Veer was first appointed to the Supervisory Board on 18 April 2018. a Non-Executive Director of Safilo SpA. He does not own any Vopak shares. His current term ends in 2022. He is Board member of Stichting Preferente Aandelen Heijmans. He does not own any Vopak shares. Mrs Lucrèce Foufopoulos – De Ridder Member of the Audit Committee and Member of the Remuneration Committee Mr Rien Zwitserloot Mrs Lucrèce Foufopoulos – De Ridder (Belgian, 1967) is currently member of the Executive Board of Chairman of the Remuneration Committee Borealis AG as Executive Vice President Polyolefins and Innovation & Technology. Mrs Foufopoulos – Mr Rien Zwitserloot (Dutch, 1949) was previously Chairman of the Executive Board of Wintershall Holding De Ridder was first appointed to the Supervisory Board on 18 April 2018. Her current term ends in 2022. A.G. Mr Zwitserloot was first appointed to the Supervisory Board on 1 October 2009. His current term She is member of the Supervisory Board of Borouge Pte. Ltd. She does not own any Vopak shares. ends in 2021. He is a member of the Supervisory Boards of TenneT TSO GmbH, ACT Commodities Group B.V., ACT Financial Solutions B.V. and Vroon Group B.V. He does not own any Vopak shares.
Vopak Annual Report 2020 Executive Board members Executive Board members
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Executive Board members 98 Executive Board members
Eelco Hoekstra Gerard Paulides Chairman of the Executive Board and CEO of Royal Vopak Member of the Executive Board and CFO of Royal Vopak Nationality Dutch Nationality Dutch Year of birth 1971 Year of birth 1963 Education Master’s Degree in Economics Education Master’s Degree in Business Economics Career Eelco Hoekstra has over twenty five years of experience in the international tank storage Career Gerard Paulides joined Vopak in 2017. He previously worked at Royal Dutch Shell as industry and joined Vopak in 2003. At Vopak, he held various management positions in the Middle East, Executive Vice President and was a member of the Board of Directors of Shell Midstream Partners. Latin America and Asia. Eelco Hoekstra was President of Vopak Asia until his appointment to the Gerard Paulides has a strong track record as CFO by fulfilling several leadership roles in investor Executive Board in November 2010. He has been Chairman of the Executive Board and Chief Executive relations, finance and mergers & acquisitions in the gas, chemicals and oil industry. He has been Officer of Royal Vopak since January 2011. a member of the Executive Board and Chief Financial Officer of Royal Vopak since February 2018.
Frits Eulderink Member of the Executive Board and COO of Royal Vopak Nationality Dutch Year of birth 1961 Education PhD in Astrophysics and two cum laude Master’s Degrees in Mathematics and in Astronomy Career Frits Eulderink joined the Royal Dutch Shell Group in 1990, where he held various technical and management positions in the Netherlands, North America, Africa and the Middle East, including in the fields of Research, Manufacturing, Exploration and Production. Until the end of 2009, Frits Eulderink was Vice-President Unconventional Oil in Houston (United States). He has been a member of the Executive Board and Chief Operating Officer of Royal Vopak since April 2010.
Vopak Annual Report 2020 Remuneration report Remuneration report
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 99 Remuneration report
This section of the Annual Report provides an overview of the implementation of Vopak’s remuneration - Vopak – together with BlackRock – acquired three major industrial terminals from Dow on the policies for the members of the Executive Board and the Supervisory Board during 2020. U.S. Gulf Coast totaling 852,000 cbm of capacity. - Vopak invested in new gas capacity in Houston with its joint venture Vopak Moda Houston These remuneration policies are designed in a manner that reflects the Vopak Values and ensure a terminal and in China at the Caojing terminal in Shanghai. Good progress was made in the LNG focus on value creation for the company and its stakeholders both in the short- and long-term. The business development funnel. Remuneration Committee advises the Supervisory Board on these policies and individual remuneration - Vopak completed the divestment of the oil terminal in Algeciras, Spain. packages, as well as any changes thereto. - Vopak delivered 664,000 million cbm of new capacity from growth projects in the Netherlands, South Africa, Panama, Indonesia, Malaysia and Vietnam. - Vopak pushed ahead with developments in new energies. Good progress was made with new Key highlights business developments of flow batteries, hydrogen and ammonia in Europe and Asia. Vopak started a feasibility study to explore LNG-to-power and hydrogen infrastructure possibilities for the 2020 performance power and cooling plants of a Floating Data Centre Park in Singapore. Vopak will expand storage For the evaluation of the Executive Board remuneration, the Supervisory Board takes into account the for waste-based bio-feedstocks in the Netherlands to meet the rising demand of biofuels in following considerations with regard to the short-term company performance results and delivery on Northwest Europe. Vopak Solar Park Eemshaven started the construction of its 25 megawatts the company strategy in 2020: solar park located in the north of the Netherlands. • Vopak has effectively responded to the global Covid-19 pandemic ensuring the safety of its people - Vopak’s multi-year improvement program to reduce the VOC emissions made significant progress, and supporting society by storing vital products with care. Vopak was able to keep all terminals and social impact from these emissions was reduced by 19%. operating with minimum disruption. However, global restrictions have resulted in construction delays • Delivery of Vopak’s digital strategy progressed well during 2020. The roll-out of the new cloud-based in projects. system for terminals continued in an efficient virtual manner and is now live at 14 locations. Vopak • Vopak’s Total Injury Rate is 0.37 for 2020 and the severity of personal incidents was lower than last year. continues investing in innovation via Vopak Ventures consisting of a digital and sustainability fund. • Vopak demonstrated a resilient financial performance in 2020. Full year EBIT – excluding exceptional items – of EUR 492.0 million was realized and EBITDA – excluding exceptional items – For further details, reference is made to Vopak at a glance in the Introduction section of this of EUR 791.5 million. Corrected for the effects of the divestments, both EBIT and EBITDA increased. Annual Report. In 2020, costs have been managed below EUR 600 million to defend EBITDA. The EUR 100 million share buyback program to increase distribution to shareholders was completed. Vopak’s earnings per Overall, Vopak is well-positioned for future developments with its global well-diversified portfolio, share – excluding exceptional items – amounted to EUR 2.42. a strong competitive position, and a clear and robust financial framework. The Supervisory Board • Vopak continued delivery on its strategy, in particular its longer-term strategic portfolio transformation, is satisfied that the Executive Board has delivered on the promise of short-term performance and sustainability and digital transformation. long-term value creation for Vopak’s stakeholders during 2020. • Vopak invested EUR 525 million in growth projects, resulting in an additional 1.6 million cbm of capacity to meet growing customer demand, particularly in Asia and the Americas. The following growth undertakings were realized in 2020:
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 100
Changes to the Board remuneration policies in 2020 Executive board remuneration in 2020 The Supervisory Board reviewed the remuneration policies for the members of the Supervisory Board and the members of the Executive Board at the end of 2019. Compared to the 2019 policy, the During 2020, the Executive Board remuneration policy was executed in line with the resolutions adopted company’s remuneration policy for the Executive Board which took effect from the 2020 financial year, at the Annual General Meeting in April 2020. No deviation or derogation was applied. Neither was any claw was amended as follows: back applied to (variable) compensation provided to individual Executive Board members in earlier years. • The KPI Cost used in Vopak’s Short-term Incentive Plan for Executive Board members is now measured on a sliding scale ranging from a minimum target level which has to be reached before any Board composition payout occurs (= threshold) to a maximum target level which results in a maximum payout, if this For details on the composition of the Executive Board during 2020 reference is made to page 98 in the level is met or exceeded. This is a change from the Meet/Not Meet approach on the basis of which Governance section. this KPI was measured under the previous remuneration policy. • The LTSP opportunity at target is increased from 100% to 110% of the gross annual base salary Executive Board Remuneration – components for the CEO, and from 80% to 90% for the CFO and COO, in order to maintain overall market Individual remuneration packages for Executive Board members are designed in a manner that ensures competitiveness on a total compensation level. external competitiveness and internal consistency. Their remuneration packages comprise the following main elements: Furthermore, certain refinements and details were added to the policy in order to remain fully • Annual base salary. compliant with the new – more elaborate – requirements under the Dutch corporate legislation effective • Short-term variable compensation; an annual cash-based incentive opportunity related to the 1 December 2019. This did not result in any de facto changes from the existing remuneration policy and achievement of financial and non-financial targets for the year (1-year performance period). remuneration practices. • Long-term variable compensation; a share-based incentive opportunity related to the achievement of financial and strategic targets during a three-year performance period. The Supervisory Board remuneration policy, taking effect from the 2020 financial year, reflected the • Pension arrangements. existing remuneration practices for the Supervisory Board as approved at the Annual General Meeting in 2019. Additionally, benefits and other emoluments were provided for in line with the Vopak Netherlands policies, plans and arrangements which apply to all Vopak staff in the Netherlands. For a full account of the current Supervisory Board and Executive Board remuneration policies, reference is made to the company’s website. 2020 total remuneration The table on the next page shows the total 2020 remuneration to which each member of the Executive Voting results at the General Meeting Board was entitled, as well as the break-down in components. Also the related costs for the company During the Annual General Meeting on 21 April 2020, these Supervisory Board and Executive Board (as recognized in the 2020 Consolidated Statement of Income) are shown. remuneration policies, including these changes, were presented to the company’s shareholders and voting results were as follows: • The proposed Executive Board remuneration policy was adopted by a majority vote of 98.61%. • The proposed Supervisory Board remuneration policy was adopted by a majority vote of 99.99%. • The implementation of the company’s remuneration policy in 2019, as disclosed in the Remuneration Report of the company’s Annual Accounts for the 2019 financial year, was put forward for an advisory vote. The voting result was 98.63% in favor.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 101
2020 Executive Board remuneration entitlements1 and IFRS costs (audited) for the company
Fixed compensation Variable compensation Proportion fixed Pension vs variable Annual base salary contributions2 Other3 Short-term incentive Long-term incentive Total compensation (%)
In EUR thousands 2020 2019 2020 2019 2020 2019 20204 20195 2020 2019 2020 2019 2020 2019 E.M. Hoekstra entitlement 679 6 8499 2,220 2,323 735 700 172 164 12 12 622 599 41.4% / 58.6% 37.7% / 62.3% costs (IFRS) 735 7 1,05210 2,275 2,526 F. Eulderink entitlement 4356 5389 1,574 1,651 560 545 184 179 1 1 395 388 47.3% / 52.7% 43.9% / 56.1% costs (IFRS) 4627 66410 1,601 1,777 G.B. Paulides entitlement 3946 n/a 1,461 995 545 506 128 120 9 9 384 361 46.7% / 53.3% 63.8% / 36.2% costs (IFRS) 3937 34510 1,460 1,340 J.P. de Kreij8 entitlement n/a 5418,9 0 541 n/a n/a n/a n/a n/a n/a n/a n/a n/a 0% / 100% costs (IFRS) 38 3618,10 38 361 Total entitlements 1,508 6 1,9289 5,255 5,510 1,840 1,751 484 463 22 22 1,401 1,348 44.6% / 55.4% 40.6% / 59.4% Total costs (IFRS) 1,6287 2,42210 5,374 6,004 1 Entitlements are defined as payments (cash) and vestings (shares) which relate to the financial year in question, i.e. fixed remuneration (annual base salary, pension contributions, and other fixed remuneration), the short-term variable incentive which relates to the performance year 2020 and which will be paid out in 2021, and the long-term variable incentive of which the performance period ended on 31 December 2020 (2018-2020 LTSP), and which is scheduled to vest in 2021. 2 For Executive Board members who were in service prior to January 1, 2015 (in 2020: Eelco Hoekstra and Frits Eulderink), the difference between the Vopak contributions to the current pension plan and the Vopak contributions to the pension arrangement in place prior to January 1, 2015, is compensated for by a separate pension contribution allowance paid out to the individual, subject to statutory tax withholdings. The gross value of these allowances is included in the pension contributions as stated in this table. 3 The column ‘Other’ includes certain perquisites provided to individual Executive Board members in 2020, such as a life-cycle allowance and an employer contribution to the Dutch statutory health insurance. The IFRS costs to the company of these perquisites shown in this table are defined as equal to the entitlement amounts; these IFRS costs are excluding the annual employer contributions to the Dutch social security. For Eelco Hoekstra, Gerard Paulides, and Frits Eulderink the 2020 employer social security contributions amounted to EUR 12,877 (2019: EUR 10,406). For Jack de Kreij, these were nil in 2020 (2019: nil). 4 This is the STIP related to the 2020 performance year which will be paid out in 2021. 5 This is the STIP related to the 2019 performance year which was paid out in 2020. 6 This is the value of the 2018-2020 LTSP performance shares at 31 December 2020 based on the performance realized and the closing share price at 31 December 2020 of EUR 42.99. These shares are scheduled to vest in April 2021. 7 This amount reflects the recognized IFRS costs accrued by the company during the financial year 2020 for the unvested performance shares awarded conditionally to individual Executive Board members under Long-Term Share Plans 2018-2020, 2019-2021, and 2020-2022. 8 Jack de Kreij stepped down from the Board as CFO on 31 January 2018 to retire early. He remained eligible for vesting of the LTSP 2017-2019. All LTSP vestings after his retirement were settled in cash. 9 This is the value of the 2017-2019 LTIP performance shares based on the performance realized and the closing share price at 31 December 2019 of EUR 48.33. These shares vested in April 2020. The value at the date of vesting is shown in the table ‘2020 movements in outstanding LTSP awards made to the Executive Board’ in this Remuneration Report. 10 This amount reflects the recognized IFRS costs accrued by the company during the financial year 2019 for the unvested performance shares awarded conditionally to individual Executive Board members under Long-Term Share Plans 2017-2019, 2018-2020, and 2019-2021.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 102
By rewarding Executive Board members in 2020 for the achievement of specific objectives of short-term target and actual percentage of their annual base salary, and split per KPI. The 2020 STIP will be paid out and longer-term value creation, in particular (but not limited to) the company’s safety performance and in April 2021, after approval of the 2020 financial results by the General Meeting. execution of the company’s strategy, their remuneration packages contribute to the longer-term value creation for the company and remain aligned with the company’s shareholders’, employees and other Financial KPIs stakeholders’ interests. Over 2020, Vopak reports an EBIT (excluding exceptional items) of EUR 492.0 million. This is an above target result compared to the 2020 target, resulting in a corresponding payout on this KPI. For further The 2020 total remuneration amounts are within the limits of the Executive Board remuneration policy. details on the EBIT performance during 2020, reference is made to the section Financial performance in Overall costs decreased from EUR 6.0 million in 2019 to EUR 5.4 million in 2020. For further details the performance & outlook section. Compared to the 2020 target, the result on the Cost KPI is at on the costs of the Long-Term Share Plans for the company, reference is made to note 7.2 to the maximum, resulting in a corresponding payout on this KPI. Consolidated Financial Statements. Non-financial KPIs 2020 annual base salary The 2020 performance on the non-financial KPIs Safety, Customer Satisfaction and Executive Board The 2020 annual base salaries of the Executive Board are as follows: Effectiveness, is as follows: • Eelco Hoekstra: EUR 735,000 • Frits Eulderink: EUR 560,000 Safety • Gerard Paulides: EUR 545,000 Vopak’s ‘License to Operate’ and its ‘License to Grow’ are conditional upon its ability to operate safely and responsibly. Vopak’s long-term aim is zero incidents and no harm to anybody working at a Vopak In its review of the Executive Board members’ remuneration in December 2019, the Supervisory Board facility. Process safety and the occupational health and safety of employees and contractors are the considered both internal consistency, in particular staff salary increases, as well as the results of external company’s top priorities. benchmarking against similar positions in AEX and AMX listed companies in the Netherlands, and selected European reference companies. Benchmarks were carried out on the basis of similar job size, The personal safety KPI is measured by the Total Injury Rate (TIR). No fatal incidents occurred during the board position, the company’s revenues and market capitalization, such in various compositions, before year. However, the 2020 TIR target for Vopak as a whole is not met. There will be no payout on this KPI. arriving at an informed decision. Per January 2020, the base salaries of individual Executive Board The process safety KPI is measured by the Process Safety Event Rate (PSER). The 2020 PSER target for members were increased in order to regain the longer-term stable position around market median for Vopak as a whole is met, resulting in a target payout on this KPI. For further details on the results on the Executive Board total remuneration packages aimed for under the policy. Safety, reference is made to the Sustainability chapter in this Annual Report.
During 2020, the Remuneration Committee reviewed the European reference group (consisting of Akzo Customer Satisfaction Nobel, Borealis, Boskalis, Clariant, Covestro, DSM, Enagas, Linde, OMV, and SBM Offshore). It was To realize our ambition of continuous improvement of our service performance, ambitious Net Promoter decided to remove Linde from this group, as it no longer qualifies as a European peer after its merger Score targets are set at various levels within the organization, as well as for Vopak as a whole. As part of with Praxair plc. our customer-oriented efforts, the initiative to intensify service dialogues with our customers and with other service providers of our customers was continued in 2020. The focus on shortening response 2020 Short-term variable compensation times was intensified during 2020, ensuring improved interactions between all parties operating in the At the beginning of 2021, the results against targets for the 2020 Executive Board short-term incentive same supply chain. The 2020 NPS target for Vopak as a whole is met, resulting in a target payout on (STIP) were evaluated. In determining the related payouts, the Supervisory Board assured itself that no this KPI. governmental support measures had been actively applied for Vopak companies worldwide1. The Supervisory Board decided not to apply any discretionary adjustments upward or downward to the STIP Executive Board effectiveness payouts. The table on the next page shows the 2020 STIP payouts for each Board member, both in Based on individual evaluation meetings with the Executive Board, in which the implementation and realization of the agenda of the Executive Board for 2020 set at the beginning of the year was discussed, the Supervisory Board assessed the performance of the Executive Board as effective. 1 In certain countries, authorities decided unilaterally to apply a general tax relief or similar measures to a range of companies during 2020. In those instances, Vopak entities may have benefited from such generically available arrangements. For further detail, reference is made to note 2.5 to the Consolidated Financial Statements.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 103
2020 STIP for the Executive Board
2020 payout opportunity 2020 realized performance as a % of the overall payout Total 2020 STIP
2019 2020 Customer Executive Board Target 1 Target Max EBIT Cost Safety Satisfaction Effectiveness Actual payout
In EUR % of base salary Target Actual Target Actual Target Actual Target Actual Target Actual %2 thousands E.M. Hoekstra 72% 60% 90% 18% 35.1% 12% 24% 9% 4.5% 9% 9% 12% 12% 84.6% 622 F. Eulderink 60% 50% 75% 15% 29.3% 10% 20% 7.5% 3.75% 7.5% 7.5% 10% 10% 70.5% 395 G.B. Paulides 60% 50% 75% 15% 29.3% 10% 20% 7.5% 3.75% 7.5% 7.5% 10% 10% 70.5% 384 1 The 2019 at-target payout opportunity percentage for which the individual Executive Board members were eligible, included a payout at maximum for the Cost KPI, which is applicable if the Cost target is met. 2 Expressed as a percentage of their 2020 annual base salary.
2020 Long-term variable compensation At the beginning of 2020, a conditional award of performance shares under the 2020-2022 LTSP was The performance period of the conditional awards made under the Long-Term Share Plan 2017-2019, made to each Executive Board member. These conditional awards are scheduled to vest in 2023, subject ended on 31 December 2019. The realized EPS performance resulted in vesting at 120% of the target to performance realization. During the whole of 2020, the conditional awards of performance shares level. After the Annual General Meeting of shareholders on 21 April 2020, the conditionally granted made under the Long-Term Share Plans 2019-2021 were outstanding. These conditional awards are performance shares under this Plan vested and were fully settled in shares in accordance with the Plan scheduled to vest in 2022, subject to performance realization. rules. The Supervisory Board decided not to apply any discretionary adjustments upward or downward. The (gross) value of the vested shares to each Executive Board member is shown in the table on the The table on the next page shows the LTSP movements during the year. Because Executive Board next page as well as in the table ‘2020 Executive Board remuneration entitlements and IFRS costs for members are required to hold a continuous portfolio of Vopak shares calculated as a percentage of their the company’ in this Remuneration Report. annual base salary (200% for the CEO and 100% for the CFO and COO), the retention periods for the vested shares under each of the LTSPs are not included in this table. For the number of vested The performance period of the conditional awards made under the Long-Term Share Plan 2018-2020, performance shares held by individual Executive Board members, reference is made to the table in the ended on 31 December 2020. The company’s realized EPS performance is below the target level, section ‘Share Ownership‘ in this Remuneration Report. resulting in a vesting at 90%. Vesting is subject to and will take place after approval of the 2020 financial results by the General Meeting on 21 April 2021. The Supervisory Board decided not to apply any discretionary adjustments upward or downward.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 104
2020 movements in outstanding LTSP awards made to the Executive Board1
Gross # Gross # Gross # Gross of shares of shares of shares market value Gross value of Share price awarded under held under Gross # of Gross # Share price of vested Start date End date target award at the date (target) at deferral at deferral at shares that of shares at the date award at the performance performance (Scheduled) at the date of of award2 the date of 1 January 31 December lapsed that vested of vesting date of LTSP period period vesting date award2 (EUR) (EUR) award3 2020 2020 during 2020 during 2020 (EUR) vesting (EUR) E.M. Hoekstra LTSP 2017-2019 1 Jan 2017 31 Dec 2019 21 April 2020 653,125 44.625 14,636 14,636 0 0 17,563 51.720 908,358 LTSP 2018-2020 1 Jan 2018 31 Dec 2020 21 April 2021 634,375 36.138 17.554 17.554 17.554 0 0 n/a n/a LTSP 2019-2021 1 Jan 2019 31 Dec 2021 AGM 2022 700,000 40.274 17,380 17,380 17,380 0 0 n/a n/a LTSP 2020-2022 1 Jan 2020 31 Dec 2022 AGM 2023 808,500 48.580 16,643 n/a 16,643 0 0 n/a n/a F. Eulderink LTSP 2017-2019 1 Jan 2017 31 Dec 2019 21 April 2020 414,000 44.625 9,277 9,277 0 0 11,132 51.720 575,747 LTSP 2018-2020 1 Jan 2018 31 Dec 2020 21 April 2021 406,000 36.138 11,235 11,235 11,235 0 0 n/a n/a LTSP 2019-2021 1 Jan 2019 31 Dec 2021 AGM 2022 436,000 40.274 10,826 n/a 10,826 0 0 n/a n/a LTSP 2020-2022 1 Jan 2020 31 Dec 2022 AGM 2023 504,000 48.580 10,375 n/a 10,375 0 0 n/a n/a G.B. Paulides LTSP 2018-2020 1 Jan 2018 31 Dec 2020 21 April 2021 368,000 36.138 10,183 10,183 10,183 0 0 n/a n/a LTSP 2019-2021 1 Jan 2019 31 Dec 2021 AGM 2022 404,800 40.274 10,051 n/a 10,051 0 0 n/a n/a LTSP 2020-2022 1 Jan 2020 31 Dec 2022 AGM 2023 490,500 48.580 10,097 n/a 10,097 0 0 n/a n/a J.P. de Kreij 4 LTSP 2017-2019 1 Jan 2017 31 Dec 2019 21 April 2020 416,000 44.625 9,322 9,322 0 0 11,186 51.720 578,540 1 Reference is made to note 7.2 of the Consolidated Financial Statements for more details on the costs of these awards for the company. 2 The share price at the date of award is the average closing price of a Royal Vopak NV ordinary share listed on Euronext Amsterdam during the calendar quarter immediately preceding the performance period of the respective LTSP. 3 All shares awarded conditionally under the company’s LTSPs to Executive Board members are subject to performance conditions. 4 Jack de Kreij stepped down from the Board as CFO on 31 January 2018 to retire early. He remained eligible for vesting of the LTSP 2017-2019. All LTSP vestings after his retirement were settled in cash.
Pension arrangements Under the Dutch Corporate Governance Code, Executive Board members are required to hold shares Executive Board members participate in the same company pension plan as other staff employed by acquired under company long-term share compensation plans for a minimum of 5 years after the date on Vopak in the Netherlands. The company contributions made in respect of each Executive Board member which these shares were (conditionally) granted. The Supervisory Board considers the requirement that are shown in the table ‘2020 Executive Board remuneration entitlements and IFRS costs for the a certain minimum portfolio of shares is held continuously during the entire Board membership with the company’ in this Remuneration Report. These equal the costs for the company as stated in the same company more suited to the longer-term nature of Vopak’s strategy and the business Vopak is in. On a table. For more details, reference is also made to note 9.4 to the Consolidated Financial Statements. day-to-day continuous basis, Vopak’s shareholding requirement for Executive Board members results in a total number of shares delivered to individual Executive Board members and subsequently restricted Share ownership from further sale which is similar or higher compared to the shareholding requirement arrangement Executive Board members’ ownership of Vopak shares is shown in the table on the next page. This table included in the Dutch Corporate Governance Code, such depending on the number of shares granted contains the total number of shares acquired by the individual Executive Board members as a result that actually vest. of performance shares vesting under the company’s Long-Term Share Plans, as well as any additional ordinary shares acquired at the individual Board member’s own expense (personal investments). In 2020, the CEO was required to own a minimum number of company shares with a value equivalent to two (2) times his 2020 annual base salary. For Vopak’s CFO and COO, this minimum shareholding requirement was one (1) time their 2020 annual base salary.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 105
Vopak shares owned by individual Executive Board members The comparison between the developments in the annual total remuneration of Executive Board members and average remuneration on a fulltime equivalent basis of employees of the company other # of vested # of privately Total # of Total # of than directors is shown by the developments in the CEO pay ratio, the CEO being the highest paid performance invested shares shares shares on shares on owned on owned on Executive Board member. The CEO pay ratio reflects the value of the CEO’s annual total remuneration 31 December 31 December 31 December 31 December as a percentage of the value of the annual average total remuneration of Vopak employees globally in 1 2 Number of shares 2020 2020 2020 2019 the respective financial year. 5-year developments of this ratio are shown in the graph on the next page. E.M. Hoekstra 49,824 9,582 59,406 50,537 In 2020, the CEO pay ratio is 26.1 (21.5 in 2019). F. Eulderink 28,325 1,750 30,075 24,454 G.B. Paulides n/a 6,200 6,200 6,200 The CEO’s total remuneration package includes the short-term incentive related to 2020, the value of the 1 The share price at the end of 2020 was EUR 42.99. long-term incentive awards which were awarded, outstanding and vested in 2020 (based on the historical 2 The share price at the end of 2019 was EUR 48.33. 3-year average IFRS costs), and the 2020 company costs for the employer contributions to the pension arrangements in which the CEO participates. The average 2020 total remuneration package for Vopak Other employees globally is calculated as the total remuneration-related costs for all Vopak employees globally Executive Board members did not receive any remuneration from group companies. Vopak has not spent in the financial year, whereby the long-term incentive costs are calculated on the same 3-year provided any personal loans, advances or guarantees to Executive Board members. average IFRS cost basis as for the CEO. The CEO is excluded from this calculation. This number is then divided by the average number of employees (on a full-time-equivalent basis) during the financial year. 5-Year comparison The annual change of Vopak’s Supervisory Board and Executive Board Members’ remuneration, the performance of the company, and the average remuneration of employees of the company over the five most recent financial years, are presented in a comparative manner in this section. The tables on the next page jointly provide a 5-year comparative overview of the performance of the company (as reflected by the results on the individual KPIs used in the Executive Board STIP and LTSP, as well as captured in the Executive Board STIP and LTSP overall outcomes) and the annual total remuneration of Executive Board members (market value). In order to provide a full comparison, the increases in annual base salary of individual Board members are also included in this table.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 106
5-year comparison between company performance, Supervisory Board and Executive Board total remuneration, and average total employee remuneration
Company performance Executive Board total remuneration5,6
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 EBIT1 558.4 490.4 463.3 539.1 492.0 CEO 1,9487 1,145 1,633 2,323 2,220 EBITDA1 822.3 763.2 734.3 829.7 791.6 COO 1,389 7 910 1,224 1,651 1,574 Cost1 664.0 675.9 666.0 632.7 591.4 CFO (current) n/a 46 882 995 1,461 EPS2 2.56 2.25 2.27 2.80 2.42 CFO (former) 1,499 7 966 243 499 n/a TIR3 0.29 0.38 0.30 0.34 0.37 Executive Board annual base salary increases8 PSER3 0.23 0.26 0.12 0.16 0.14 NPS 49 48 62 65 67 2016 2017 2018 2019 2020 Overall STIP result4 150% 41.67% 142.5% 142.5% 141% CEO 0.0% 0.0% 1.5% 10.3% 5% Overall LTSP result4 124% 50% 50% 120% 90% COO 1.0% 0.0% 1.5% 7.4% 2.75% CFO (current) n/a n/a n/a 10% 7.7% a a o CFO (former) 0.0% 0.0% n/a n/a n/a Supervisory Board total remuneration5 0 2016 2017 2018 2019 2020 Chairman (current) 47.7 100.06 111.5 111.5 111.5 Vice-chairman (current) 68.5 78.5 78.5 78.5 78.5 20 Member (current) n/a n/a 56.5 80.5 80.5 Member (current) n/a n/a 21.67 73.5 77.0
0 Member (current) n/a n/a 78.0 80.0 80.0 Member (current) 65.0 75.0 75.0 75.0 75.0 Chairman (former) 91.5 33.57 n/a n/a n/a Member (former) 70.0 80.0 23.9 n/a n/a 20 20 20 20 2020 Member (former) 61.75 70.0 20.9 n/a n/a Member (former) 10.4 n/a n/a n/a n/a Member (former) n/a 51.14 9.5 n/a n/a
1 In EUR million. EBITDA was used as a financial KPI in the Executive Board short-term incentive plan up until and including 2017; as of 2018, EBITDA was replaced by EBIT and Cost. Cost figures shown reflect personnel expenses and other operating expenses. EBIT, EBITDA and Cost figures shown are excluding exceptional items. 2 In EUR. EPS figures shown are excluding exceptional items. 3 Expressed as a percentage per 200,000 hours worked (own personnel and contractors). For TIR and PSER, a decrease is aimed for year-on-year, i.e. a decline in injuries and events. 4 Payout/ vesting as a % of target (=100%). 5 In EUR thousands. 6 Entitlements of total remuneration figures are shown. Payouts under the Executive Board STIP are included in the financial year which also encompasses the performance year. Vestings of the Executive Board LTSP are included in the year in which the performance period ended (year 3). 7 The LTSP 2014-2016 encompassed 3 years of LTSP awards, i.e. for 2014, 2015 and 2016; as a result, the vesting of the 2014-2016 LTSP award included in the 2016 figures reported earlier was 3 times the annual vesting. For comparison purposes in this table, the vesting of the LTSP 2014-2016 is distributed equally to 2014, 2015 and 2016 (1/3, 1/3, 1/3). This equal distribution is in line with the performance period of this LTSP 2014-2016. The amounts of entitlements as disclosed in the 2016 Annual Reports were as follows (in EUR thousands): for the CEO, this was 3,225; for the CFO, this was 2,296; for the COO, this was 2,146. 8 As a % of the annual base salary of the previous year.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Remuneration report 107
Remuneration of the supervisory board in 2020 The table below shows the gross amounts of Supervisory Board fees each Supervisory Board member received in 2020, resulting in a total cost to the company of EUR 0.50 million, as compared During 2020, the Supervisory Board remuneration policy was executed in line with the resolutions to EUR 0.50 million in 2019. The increase in costs was due to changes in the composition of the Board. adopted at the Annual General Meeting in April 2020. No deviation or derogation was applied. For further details, reference is made to note 7.3 of the Consolidated Financial Statements.
Board composition Supervisory Board members did not receive any other fixed allowances or performance-related incentives For details on the composition of the Supervisory Board during 2020 reference is made to page 97 (neither in cash nor in shares), nor any other remuneration, such in accordance with the policy. Nor did in this Governance section. Vopak provide any personal loans, advances or guarantees to Supervisory Board members.
2020 total remuneration No Supervisory Board members held any Vopak shares at year-end 2020, except for Ben Noteboom, The remuneration of Supervisory Board members consists of fixed fees for general membership and who held 3,500 shares (2019: 3,500). committee memberships, paid in cash only. It is not subject to the achievements of the company. In addition, Supervisory Board members are reimbursed for actual business expenses made, and, when living outside the Netherlands, for actual travel expenses made.
2020 Supervisory Board remuneration (audited)1,2
Selection and Supervisory Audit Appointment Remuneration In EUR thousands Board Committee Committee Committee Total 2020 Total 2019 B.J. Noteboom (Chairman) 97.5 n/a 7.0 7.0 111.5 111.5 M.F. Groot (Vice-Chairman) 65.0 8.5 5.0 n/a 78.5 78.5 L.J.I. Foufopoulos – De Ridder (member) 65.0 8.5 n/a 7.0 80.5 80.5 N. Giadrossi (member) 65.0 8.5 n/a 3.53 77.0 73.5 B. van der Veer (member) 65.0 15.0 n/a n/a 80.0 80.0 R.G.M. Zwitserloot (member) 65.0 n/a n/a 10.0 75.0 75.0 Total 422.5 40.5 12.0 27.5 502.5 499.0 1 Reimbursements of actual expenses made by individual Supervisory Board members are not included in this table as these do not qualify as remuneration. 2 Amounts stated are gross, and excluding VAT, where applicable. 3 Mrs. Nicoletta Giadrossi is a member of the Remuneration Committee as of 1 July 2020.
Terms of engagement Executive Board members are also appointed for four years, and may then be re-appointed for successive mandates for a period of four years. The current Executive Board agreements contain Supervisory Board members have a board agreement with Koninklijke Vopak N.V. They are appointed provisions for termination arrangements in the event that their appointment is terminated as a result of for four years, and may then be re-appointed for successive mandates for a period of four years. In case a merger or takeover, or is terminated early. The severance included in these arrangements and payable of early termination of their Board appointment, no formal notice periods apply for either party, and no upon termination will be decided upon by the Supervisory Board thereby taking into account standards severance arrangements apply. of reasonableness and fairness. In any case, such severance will not exceed one year’s fixed remuneration. No severance will be paid in the event of voluntary resignation by or seriously culpable or negligent behavior on the part of the individual Executive Board member.
Vopak Annual Report 2020 Corporate Governance Corporate Governance
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance 108 Corporate Governance
Vopak is incorporated and based in the Netherlands. As a result, Vopak’s governance structure is based Vopak complies with the vast majority of the principles and best practices laid down in the 2016 Dutch on the requirements of Dutch legislation including securities laws, the company’s articles of association, Corporate Governance Code (the Code). The exceptions are explained in the following paragraphs. complemented by internal policies and procedures. Given the worldwide exposure of its businesses, the international context is of vital importance and relevant international developments are closely Set-up and policy monitored. Vopak aims to strike a sound balance between the interests of the company’s various stakeholders. Integrity, openness, supervision, transparent reporting and accountability are the cornerstones of the Good corporate governance is a key component of Vopak’s way of doing business and is embedded in corporate governance policy. The company has also developed a clear policy with regard to reporting its core values. The corporate governance is supported by a strong focus on integrity, transparency and for financial matters and sustainability. For details of the Sustainability Policy, reference is made to the clear and timely communication. Good governance and proper supervision are important prerequisites Vopak website. for generating and maintaining trust in the company. Vopak confirms that the principles reflected in the Code are applied by Vopak except for the deviations Vopak’s business, financial and investor strategy is focused on long-term value creation for the company from the Code that are explained in the following paragraphs. and its affiliated enterprises as formulated by the Executive Board under the guidance of the Supervisory Board. Value creation is closely connected with the culture within the company, the view on Vopak has a two-tier governance structure requiring a well-managed relationship between the sustainability matters and long-term value creation requires a culture aimed at that. Long-term value Executive Board solely composed of executive directors and the Supervisory Board solely composed creation also requires awareness and anticipation of new developments in technology that can of non-executive directors. The two Boards are independent of each other and have their own roles contribute to the continuing success of the company. All stakeholder interests are hereby taken into and responsibilities in the governance structure. careful consideration. The Executive Board is responsible for the management of the company and for the realization of its The leadership style within Vopak stimulates a culture that promotes desired behavior and encourages objectives. These include the objectives for strategy and policy, health, safety, the environment (part of employees to act with integrity and to lead by example. By communicating this culture with its sustainability), quality, as well as results. corresponding values, incorporating it into the enterprise and maintaining it, guidance is provided in making everyday decisions and monitoring ethical conduct by people in all tiers of the organization. The Executive Board is assisted in fulfilling its responsibilities by the Risk Committee, the Compliance Committee and the Disclosure Committee. The activities of the Risk Committee include facilitating The top of the company has regular contact with employees at all levels of the company as it is essential and challenging risk reporting within the company, providing oversight of main risks and related risk to know how the culture is experienced within the organization. Culture is also monitored via the management activities. During the year, the Risk Committee also supported the Executive Board with employee engagement survey. More information on the culture within Vopak is provided in the People scenario analysis and setting up mitigating procedures in response to the Covid-19 pandemic. The Leadership chapter. primary objective of the Compliance Committee is to support and advise the Executive Board in fulfilling its oversight responsibilities on all compliance matters relevant to Vopak’s activities. The Disclosure The Vopak Code of Conduct is based on the Vopak corporate values to provide the conditions for a Committee assists the Executive Board with ensuring that information is disclosed accurately and healthy culture and effectively encourage an atmosphere of openness. Neither leadership nor culture timely to the outside world in line with the applicable laws and regulations. are considered tick the box items or treated as such. All Vopak employees, partners, contractors and suppliers are required to adhere explicitly to the Code of Conduct. Compliance is regularly checked for The Supervisory Board reviews Vopak’s overall performance, including the policies pursued and results example as part of the CSRA and internal business audits. These monitoring tools also show and achieved by the Executive Board, the company’s financial situation, its financial statements, key risks measure the effectiveness of the Code of Conduct. and opportunities.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance 109
The Supervisory Board also reviews and approves the strategy of Vopak, as proposed by the Executive 1. Principle 2.1 and best practice provision 2.1.1 (Composition, size and Board. Similarly, it approves important proposals for capital expenditure, acquisitions and divestments, profile of the Supervisory Board) changes in financial and other corporate policies and the annual budget. The Supervisory Board evaluates These provisions relate to diversity and state that the Supervisory Board should strive for a diverse the performance of the Executive Board as a whole and that of its individual members, and proposes composition as to gender and age and should formulate concrete targets to achieve this. The any changes to the composition of the Executive Board to the General Meeting. Similarly, the Supervisory Board of Vopak strives to achieve a diverse composition of its members and has formulated Supervisory Board reviews its own performance annually and proposes changes to the composition key elements of its membership profile. These elements are available in the Corporate Governance of the Supervisory Board to the General Meeting. section of the Vopak website. Vopak does not strictly follow the recommendation to set an explicit target for diversity in terms of gender or age. This deviation could therefore continue for more than one Finally, the Supervisory Board ensures that the company’s policies are formulated and pursued in the financial year without a set time period for when to comply with this best practice provision. As an interest of all its stakeholders, including shareholders and employees, and that these policies are alternative measure attaining the purpose of this best practice provision, for diversity in terms of gender, sustainable and meet the highest ethical standards. age or area of expertise the overriding principle for Vopak is that the Supervisory Board has a diverse composition of members taking into account various factors including a valuable contribution in terms of The Supervisory Board is carefully selected to include members with diverse backgrounds and broad international management experience and knowledge of the oil, petrochemical or LNG industries experience in areas relevant to Vopak’s core business and the foreign markets in which it operates. in the regions in which Vopak is active, or other relevant business knowledge for the independent tank Their experience ranges from economic, financial, technical, operational and social areas, to political terminal business. Diversity in a broad sense is a topic on the Supervisory Board agenda and is and business-related areas. The Supervisory Board, in performing its duties, focuses on the realization discussed in the Selection and Appointment Committee meetings. of the objectives of the company, the strategy and its implementation. The Supervisory Board appoints an Audit Committee, a Remuneration Committee and a Selection and Appointment Committee from 2. Best practice provision 3.1.2 (blocking period of five years for shares among its members. In accordance with the provisions of the Code, Vopak has further specified the granted to the Executive Board without financial consideration) role and powers of these committees in specific regulations that apply to them. The blocking period of five years is not included in the Long-Term Incentive Plans (LTIPs). This deviation will continue for more than one financial year without a set time period for when to comply with this The General Meeting has the authority to appoint, suspend and dismiss members of the Executive best practice provision. As an alternative measure, the remaining value of the portfolio of performance Board and Supervisory Board and other authorities such as passing resolutions for legal mergers and shares must be at least equal to two years annual base salary for the CEO and one year base salary for split-offs, adopting financial statements, and the appropriation of profits available for distribution on the CFO and COO. ordinary shares. Furthermore, the General Meeting determines the remuneration policy for the Executive Board and has to approve any significant amendments to this policy. The General Meeting Vopak has several regulations in place governing the performance of its various bodies and ensuring also sets the remuneration of the members of the Supervisory Board. implementation of the rules applicable within Vopak. These regulations are drafted in line with the Code, applicable legislation and decisions made by the Executive Board and the Supervisory Board. The remuneration of the members of the Executive Board is set by the Supervisory Board on the basis The regulations can be found in the Corporate Governance section of the Vopak website. of a proposal from the Remuneration Committee, in accordance with the remuneration policy as adopted by the General Meeting. Vopak will continue to facilitate proxy voting. Dutch law provides for a These regulations concern: mandatory registration date to exercise voting and attendance rights 28 days before the date of the • Regulations of the Executive Board General Meeting. • Regulations of the Supervisory Board • Regulations of the Audit Committee of the Supervisory Board The Dutch Corporate Governance Code • Regulations of the Remuneration Committee of the Supervisory Board Vopak has evaluated its corporate governance structure against the Code and concluded that in 2020 • Regulations of the Selection and Appointment Committee of the Supervisory Board it satisfied the principles and best practice provisions of the Code, with the exception of the following • Vopak Insider Trading Policy two items: • Regulations on suspected irregularities (‘whistleblower regulations’) • Diversity policy.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance 110
The following items also appear on the Vopak website: These measures can be taken for example (but not necessarily limited to) in the event of a (hostile) • Articles of Association takeover bid if the board of Stichting Vopak believes it is in the interest of Vopak and its stakeholders • Information on the members of the Executive Board and Supervisory Board and the composition to establish its position in respect of the hostile party and its plans, and to create opportunities to seek of the core committees alternative scenarios. • Profile of the Supervisory Board • Schedule of resignation for the Supervisory Board members Information referred to in Section 1 of the Takeover Directive • Schedule of resignation for the Executive Board members (Article 10) Decree • Policy related to bilateral contacts with shareholders Capital structure • Code of Conduct A description of Vopak’s capital structure, the various classes of shares and the rights and • Sustainability Policy obligations attached to them can be found in note 5.1 to the Consolidated Financial Statements. • Corporate Governance Compliance Manual On 31 December 2020 a total of 125,740,586 ordinary shares had been issued with a nominal value • Remuneration report, containing the main points of the remuneration policy. of EUR 0.50 each. No financing preference shares and no protective preference shares have been issued on 31 December 2020. Response measures Vopak’s principal defense against a (hostile) takeover is the ability to issue cumulative preference shares Restrictions on the transfer of shares (‘protective preference shares’) to Stichting Vopak. Such defensive preference shares will be issued in the Vopak’s Articles of Association do not provide for a restriction on the transfer of ordinary shares. They do, event that Stichting Vopak exercises its option right. On 18 October 1999, the General Meeting decided to however, provide for a restriction on the transfer of financing preference shares. Financing preference grant Stichting Vopak the right to take up protective preference shares up to a maximum nominal amount shares may only be transferred to natural persons, subject to specific exceptions for a legal entity equal to 100% of the share capital issued at that time to third parties in the form of ordinary and financing holding the financing preference shares for the purpose of administration and other parties pursuant to preference shares, less one ordinary share. Vopak and Stichting Vopak further formalized their relationship Article 10A, paragraph 7 of the Articles of Association. With regard to the protective preference shares, with regard to the option right in an option agreement of 1 November 1999. This agreement was amended the Articles of Association provide that any transfer requires the approval of the Executive Board. on 5 May 2004, whereby the original put option granted to Vopak was cancelled. In light of the possible introduction in the future of other classes of shares, the Extraordinary General Meeting of 17 September Major holdings subject to mandatory disclosure 2013 resolved to expand Stichting Vopak’s right to acquire protective preference shares in such a way that More information on major shareholdings that are subject to mandatory disclosure pursuant to the it is not only related to share capital issued to third parties in the form of ordinary and financing preference Financial Markets Supervision Act can be found in the section Shareholder information. Furthermore, shares at the time Stichting Vopak exercises this, but to all shares in the share capital of Vopak issued to additional information on the transactions with major shareholders can be found in note 7.3 of the third parties at such time, less one ordinary share. The option agreement with Stichting Vopak was amended Consolidated Financial Statements. on 17 September 2013 to reflect this change. Exercise by Stichting Vopak of its option right in part does not affect its right to acquire the remaining protective preference shares under the option granted to Stichting System of control over employee share plans Vopak. The option agreement provides that in the event that Stichting Vopak exercises its option right and Information on share plans can be found in note 7.2 to the Consolidated Financial Statements of this the results thereof are fully or partially cancelled (for instance as a result of the cancellation of the protective Annual Report. preference shares issued), Stichting Vopak will continue to be able to exercise its option right. Rules governing the appointment and dismissal of members of the The granting of the call option to Stichting Vopak has been entered in the Company Registry. The Executive Board and Supervisory Board and the amendment of the Articles objective of Stichting Vopak is to promote the interests of Vopak and companies affiliated to the Vopak of Association group. It does this in a way that safeguards the interests of Vopak and its stakeholders to the greatest Under Vopak’s Articles of Association, members of the Executive Board and Supervisory Board are possible extent and, to the best of its ability, it resists influences opposing those interests, which could appointed and dismissed by the General Meeting. The Supervisory Board makes a non-binding impair the independence and/or continuity and/or identity of Vopak. It undertakes all actions relating to nomination for the appointment of members of the Executive Board. Upon the appointment of members or conducive to these objectives. The board of Stichting Vopak therefore determines whether and when of the Supervisory Board, the Supervisory Board may make a non-binding nomination. it is necessary to issue the protective preference shares.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance 111
The General Meeting may only resolve to amend the Articles of Association following a proposal from the Executive Board that is subject to approval by the Supervisory Board. Such a resolution of the General Meeting requires a majority of at least two-thirds of the number of votes validly cast.
Share issuance and repurchase The General Meeting or the Executive Board, if so designated by the General Meeting, resolves or decides on the issuance of shares. Any share issuance is subject to approval by the Supervisory Board. On 31 December 2020, no authorization to issue shares had been granted to the Executive Board.
The Executive Board is authorized until 21 October 2021 to repurchase fully paid-up ordinary shares in Vopak’s capital, subject to approval by the Supervisory Board. Any repurchase must be limited to the maximum number held by virtue of the law and the Articles of Association (10% at 31 December 2020). Their purchase price must be between the nominal value of the ordinary shares and 110% of the average share price listed on the five most recent trading days prior to the date of the purchase.
Key agreements containing change of control provisions Reference is made to the change of control provisions in connection with loans in note 5.5 to the Consolidated Financial Statements.
With respect to agreements entered into with members of the Executive Board and employees that provide for payment upon termination of their employment following a public bid, reference is made to the description of the remuneration policy on the Vopak website.
Vopak Annual Report 2020 Corporate Governance statement Corporate Governance statement
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance statement 112 Corporate Governance statement
Introduction The principal powers of the general meeting are: This statement is included in pursuance of Section 2a of the Decree of 23 December 2004 for the • adopting the financial statements; adoption of further regulations governing the contents of the management report (the ‘Decree’). • approving a dividend proposal; It sets out the statements referred to in Sections 3, 3a, and 3b of the Decree. • discharging members of the Executive Board from liability; • discharging members of the Supervisory Board from liability; Compliance with the Dutch Corporate Governance Code • adopting the remuneration policy with respect to the members of the Executive Board; Vopak complies with the 2016 Dutch Corporate Governance Code (the ‘Code’) and has amended its • adopting the remuneration of the members of the Supervisory Board; rules and policies accordingly. The English and Dutch versions of the Code can be downloaded from • appointing, suspending, and dismissing members of the Executive Board; www.commissiecorporategovernance.nl. The statement on compliance with the principles and best • appointing, suspending, and dismissing members of the Supervisory Board; practice provisions of the Code addressed specifically to the Executive Board or Supervisory Board • appointing an external auditor; can be found in the Corporate Governance section of the Annual Report. • authorizing the Executive Board to repurchase shares; • issuing shares and granting rights to acquire shares (option rights), and designating the Executive Management and control systems Board as the body competent to make such decisions during a set period; The statement on the principal features of the management and control systems of Vopak and • excluding or limiting shareholders’ rights of first refusal when issuing shares and granting rights to of the group whose financial information is included in its financial statements can be found in the acquire shares, and designating the Executive Board as the body competent to make such decisions Risk management & internal control section of the Annual Report. during a set period; • approving decisions taken by the Executive Board pertaining to a major change in Vopak’s identity, The general meetings nature or enterprise; and Vopak’s shareholders exercise their rights in the annual and extraordinary general meetings. The annual • resolving to amend Vopak’s Articles of Association, dissolve Vopak, or enter into a merger or demerger. general meeting must be held no later than 30 June each year. The agenda for the meeting must state certain subjects as described in Vopak’s Articles of Association or in the law, including the adoption of Membership and working methods of the Executive Board the financial statements. Extraordinary general meetings are held at the request of the Executive Board, Details of the members of the Executive Board can be found in section Executive Board members the Supervisory Board, or one or more holders of shares or depositary receipts that, solely or jointly, in the section Executive Board report of the Annual Report. represent at least one tenth of the company’s issued share capital. The members of the Executive Board are collectively responsible for managing Vopak as well as for A subject for which discussion has been requested in writing by one or more holders of shares or its general affairs and that of the group companies affiliated with it. In doing so, they aim to create depositary receipts that, solely or jointly, represent at least one-hundredth of the company’s issued long-term shareholder value. share capital, will be stated in the convocation of the meeting or announced in the same manner, provided that Vopak receives such request no later than on the sixtieth day before the date of the A more detailed description of the working methods of the Executive Board can be found in meeting. In general meetings, resolutions may be passed by absolute majority of the number of votes the Executive Board Rules, which have been posted on the Vopak website. cast, unless Vopak’s Articles of Association or the law prescribe a larger majority.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance statement 113
The responsibilities of the Executive Board include: Membership and working methods of the Supervisory Board • evaluating Vopak’s objectives from time to time and, where appropriate, adjusting them; and its committees • achieving Vopak’s objectives; Details of the members of the Supervisory Board and membership of its committees can be found • determining the strategy and associated risk profile and the policy designed for the achievement in the section Supervisory Board members of the Annual Report. of Vopak’s objectives; • managing Vopak’s general affairs and results; The Supervisory Board’s duty is to supervise and advise on the management of Vopak and the general • the financing of Vopak; affairs of Vopak and the enterprise connected with it. In discharging its duties, the Supervisory Board • identifying and managing the risks connected to the business activities; is guided by the interests of Vopak and its group companies, taking into account the relevant interests • seeking to make ongoing improvements to safety, health, and environmental performance; of Vopak’s stakeholders (which include its shareholders), aimed at creating long-term value for Vopak. • considering corporate social responsibility issues that are relevant to Vopak’s activities; The Supervisory Board is responsible for the quality of its own performance. • ensuring effective internal risk management and control systems and reporting on this in the Annual Report; The responsibilities of the Supervisory Board include: • adopting values that contribute to a culture aimed at long-term value creation for Vopak; • supervising, monitoring and advising the Executive Board on: (i) the achievement of Vopak’s • making preparations for and managing the financial reporting process, which includes safeguarding objectives, (ii) Vopak’s strategy and the risks inherent to its business activities, (iii) the structure the quality and completeness of the financial reports to be published; and management of the internal risk management and control systems including the internal audit • closely involving the Supervisory Board in a takeover process if a takeover bid for the shares in Vopak function, (iv) the financial reporting process, (v) the application of information and communication is under preparation or has been made; technology (ICT), (vi) compliance with legislation and regulations; (vii) the relationship with • complying with legislation and regulations; shareholders; (viii) a takeover process if a takeover bid for the shares in Vopak is under preparation • complying with the Code and maintaining Vopak’s corporate governance structure; or has been made; and (ix) the aspects of corporate social responsibility that are relevant to the • publishing in Vopak’s Annual Report, on its website and otherwise, the corporate governance enterprise and (x) the values that contribute to a culture aimed at long-term value creation for Vopak; structure and other information required under the Code and providing an explanation regarding • disclosing, complying with and enforcing Vopak’s corporate governance structure; compliance with the Code; • approving Vopak’s annual accounts, annual budget, and major capital expenditures; • preparing Vopak’s financial statements, annual budget and important capital investments; • selecting, nominating and evaluating Vopak’s external auditor; • rendering advice for the nomination of Vopak’s external auditor. • selecting and nominating members of the Executive Board for appointment, proposing the remuneration policy for members of the Executive Board for adoption by the general meeting, The Executive Board Rules include rules for internal decision-making, which are in compliance with the setting the remuneration (in accordance with the remuneration policy) and the contractual terms relevant provisions of the Code and follow broadly applicable laws and regulations in case of a conflict of and conditions of employment of the members of the Executive Board; interest of one or more members of the Executive Board. Both Vopak’s Articles of Association and the • selecting and nominating members of the Supervisory Board for appointment by the general Executive Board Rules can be found on Vopak’s website. meeting and proposing the remuneration of its members for adoption by the general meeting; • evaluating and assessing the functioning of the Executive Board and the Supervisory Board as well Details of the remuneration of the members of the Executive Board can be found in the section as their individual members, and evaluating the profile for the Supervisory Board and the induction, Remuneration report of the Annual Report. education and training program; • handling and deciding on reported (potential) conflicts of interest between Vopak, on the one hand, and members of the Executive Board, the external auditor, or the major shareholder(s), on the other; • handling and deciding on reported alleged irregularities that relate to the functioning of the Executive Board.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Corporate Governance statement 114
The Supervisory Board Rules include rules for internal decision-making which are in compliance with the relevant provisions of the Code and follow broadly applicable laws and regulations in case of a conflict of interest of one or more Supervisory Board members and Vopak. The Supervisory Board Rules have been posted on Vopak’s website.
Details of the remuneration of the members of the Supervisory Board can be found in the section Remuneration report of the Annual Report in the subsection Remuneration of the Supervisory Board 2020.
Details on the committees of the Supervisory Board can be found in the section Supervisory Board report of the Annual Report.
The Supervisory Board has drawn up a diversity policy for the composition of the Executive Board and the Supervisory Board addressing the diversity aspects, the specific objectives set in relation to diversity; and the policy implementation. The diversity policy can be found on Vopak’s website.
For information referred to in Section 1 of the Takeover Directive (Article 10) Decree, reference is made to the statement in this respect as included in the section Corporate Governance of the Annual Report.
Vopak Annual Report 2020 Risk management & internal control Risk management & internal control
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 115 Risk management & internal control
Vopak Control Framework – Risk Management and Internal Vopak Control Framework Control Components Risk Management and internal control activities are at the core of the Vopak Control Framework. External environment This framework is applied at all layers and locations within the Group. These principles are also applied at the joint ventures and associates of the Group. Vopak values Risk Management and Internal Control The Executive Board, under the supervision of the Supervisory Board, bears the ultimate responsibility for Supervisory Board identifying and managing the risks associated with the company’s strategy and activities. The Executive Board is assisted in carrying out these responsibilities by senior management across the business in Executive Board managing (line management), monitoring (Divisions and Global Functions), advising (Risk Committee and Compliance Committee) and assurance (Global Internal Audit) activities. Strategic Committee Vopak applies the principles of the COSO Integrated framework – Internal Control and Risk Management – resulting in an integrated cohesive approach starting with determining Vopak’s risk appetite, identifying Standards and Code of Conduct the key risks that may prevent the Group from achieving the strategic objectives and then and how the Policies identified risks are to be managed through internal controls. Enterprise Risk Management Strategy, Planning Control activities and Appraisal and Assurance
Divisions and Global Functions Group Companies
The foundation elements of the Vopak control framework define the principles that underpin the Vopak Group’s activities. The management processes define activities critical to an effective control framework. The organization component defines how divisions and global functions organize and manage their activities and how the various OpCos involved relate to each other.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 116
A cohesive approach: Managing risks and internal control
Strategy & Objectives Risks & Risk appetite Risk response Monitoring & Assurance
• Leading assets in leading locations Self assesssments: • Service leadership Strategic • Standards, Procedures • CRSA2: OpCo level & Guidelines Internal • Operational leadership Risk Vopak 3 Operational • DMCSA : Divisions audit appetite Key • Communication, training • Technology leadership • Functional self-assessments determined Control Legal & Compliance • Organizational set-up • People leadership per risk Frame- • Second line specific topic reviews 1 work • Global – Functional • Founder’s mentality Financial & Reporting • External run surveys • Divisional – Regional • Vopak values • Management review cycle
Code of Conduct, Culture & Values, Recognition, Whistleblower
1 Vopak’s Key Control Framework covering 16 processes providing for effective management through effective controls for risks to be within the risk appetite. 2 Control Risk Self-Assessment. 3 Divisional Monitoring Controls Self-Assessment.
Enterprise Risk Management Our Enterprise Risk Management (ERM) Framework, which is based on the principles of the ‘COSO Enterprise Risk Management – Integrated Framework’, is embedded within the quarterly functional performance reviews, the divisional performance reviews and the mandatory Enterprise Risk Management (ERM) reporting which takes place on a biannual basis.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 117
Vopak’s Risk Management Framework
Risk exposures aligned with the strategic objectives
1. Identify 2. Measure 3. Manage 4. Monitor 5. Report
• Risks identified by the individual • Risk appetites of all principal risks • Mitigating actions are established • Effectiveness of the mitigating • The Risk Committee informs terminals and divisions are determined by the Executive for the identified risks and actions is monitored across the the Executive Board and Board and shared within the reviewed by the Risk Committee three lines of defense the Supervisory Board on • Strategic risk discussions with organization the principal risks and the global senior management • Separate action plans are • Risk Committee reviews effectiveness of the risk • A standard risk management established and executed for effectiveness of risk management • Global principal risks reviewed by management process methodology facilitates risks, which exceed the risk process and acts as the steward the Risk Committee and agreed communication within the group appetite of risk management with the Executive Board
Embedded in a risk conscious culture
Vopak’s ERM process is guided and overseen by a Global Risk Committee. The ERM process is aimed at ensuring the timely identification and mitigation of risks and risk trends while at the same monitoring that the Group remains within the defined risk appetite. It requires all operating companies to assess and report their principal risks, the likelihood, financial impact and the mitigating actions in place plus an assessment of the effectiveness of these actions. Divisions review, discuss, supplement and report on these risks as the basis for the biannual discussions between Division Management and representatives of the Risk Committee. A dialogue also takes place with Global Directors and other members of senior management and the outcome of the process is discussed by the full Risk Committee. The in-depth dialogue with the Executive Board concludes the process prior to sharing and discussion with the Audit Committee and the Supervisory Board.
Confirmation of the process is provided through the work of Global Internal Audit, which ensures that operating companies have a robust ERM process at the local level and that the Control Risk Self- Assessments (CRSAs) are providing a true and fair view. The Executive Board accordingly considers our ERM process to be effective.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 118
Risk-reward appetite The applicable risk-reward appetite for each risk category (in accordance with the COSO) framework is defined by the Executive Board. It guides decisions on the types and amount of risk the Group is willing to accept in order to meet its strategic objectives, while ensuring compliance with laws and regulations. Our risk-reward appetite throughout 2019 remained unchanged compared to prior year.
Risk Category (COSO) Strategic themes Vopak’s risk-reward appetite Very low Low Moderate High Very high Strategic risks • Leading assets Dependent on the fit-for-purpose value creation opportunities and in leading locations the corresponding future incremental expansion and growth options, the company evaluates the entrepreneurial risk-return profiles on an individual merit basis by consistently applying different metrics for different purposes
Operational risks • Operational leadership Safety and sustainability • Service leadership • Technology leadership • People leadership Other areas/topics with alignment of targets and related cost, and a clear focus on sustainable EBIT growth.
Legal and • Operational leadership The objective is to ensure full compliance with legal and regulatory Compliance risks • People leadership environments.
Financial and Aligned with the long-term nature of the business, the company reporting risks wants to ensure a robust financing position and solid cash flow performance. Furthermore, the objective is to ensure full compliance with financial and non-financial reporting laws and regulations.
Our principal risks and uncertainties and how we mitigate these Covid-19 impact on our principal risks General In response to Covid-19 the Company performed a detailed re-assessment of its principal risks. Whilst The principal risks that could prevent Vopak from achieving its strategic objectives are described in our principal risks have not changed as compared to those disclosed within the 2019 Annual Report, the table on the next pages, together with their mitigating actions applied. When identifying our principal the pandemic spread of Covid-19 has impacted the Company in many ways. The pandemic has led to risks, we also take into account the industry-related trends that could lead to future opportunities and higher levels of uncertainty in areas that were already addressed by our principal risks. Furthermore, uncertainties as described in the business environment and storing vital products with care sections three particular risks have become more obvious during 2020, or have manifested itself at a higher pace. of this Annual Report. Fourteen principal risks are reported. As such, they are deemed to have increased in probability (not: impact) compared to the previous year.
The nature of Vopak’s business model is long term, resulting in many risks being enduring in nature. These risks are: Nonetheless, risks may develop and evolve over time due to internal and external developments. • Market volatility (strategic risk #2); The risk overview should be read carefully when making an assessment of the company’s business • Oil and Gas market price developments (strategic risk #4); model, its historical and potential future performance, and the forward-looking statements contained • Risk of cyber breach of IT/OT systems (operational risk #11). in this Annual Report. Although the risk management process followed is considered to be effective, there is no absolute certainty that the mitigating actions with respect to the principal risks will be Since the start of the pandemic the company has monitored the latest developments closely. effective or that other risks may be prevented from occurring. Scenario based contingency plans and other mitigating actions were prepared and were ready to put in place when needed. To date, we have observed a limited impact on our operations. All our terminals are operational and there have been no significant disruptions to business continuity.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 119
The risk matrix and table below provides an overview of the principal risks of the company and management’s current view of the effects of mitigating actions in place:
o k o a k
a k
na le to el er on ro t trate ar et olat l t ner ran t on ru e l an a ar et pr e o e ent eopol t al e elop ent n rea n o pet t on an o er apa t
p a o a k l ate an e a or a et n ent ar e o ple on tru t on pro e t
na le to el er tal at on trate e R o er rea o an or te l o o
a a o p a k o ple an an n la an re ulat on e a or not n l ne t opa alue Reputat onal a a e to opa
er lo o e u er
pa t
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 120
Strategic risks
Risk Risk description Risk Horizon Risk appetite Mitigating actions Development Unable to deliver on our growth strategy Medium to Low to high Clear growth strategy in place; fully understood by all relevant staff; 1 Achieving our strategic goals could be prevented by: long term Project evaluation criteria on a merit-by-merit basis, ensuring we have • Not being able to find the right locations and right partners. the right staff at the right location • Not having the right skills and capabilities to enable successful • Dedicated Divisional Business Development Teams supported by business development execution given the complexities involved. the Global Commercial and Business Development. • Estimated Project returns not meeting risk/return requirements. • Growth Funnel Execution Focus • Not being able to successfully convert existing terminals to meet • Relationship programs with customers, port authorities and other customer demands due to changing product flows. potential partners for growth projects. • Projects being delayed or demand for storage and handling services • Instilling the Founder’s Mentality in our culture, among others via due to the negative effects that the Covid-19 pandemic currently has the LEAD program for senior management. on the business of our customers. • Applying a multi-dimensional and disciplined Risk/return approach to growth opportunities.
Market volatility resulting in changing product flows with, in Short, medium Low to high Successful execution of our strategy, while maintaining a diversified 2 some circumstances, unprecedented speed of market change to long term global terminal network based on clear strategic criteria for certain Changing industry market dynamics leading to structural changes product/ market combinations in product flows and increased volatility which are not adequately Continuous in-depth analyses of scenarios and global trends by Global addressed timely by the company. Commercial & Business Development in conjunction with Divisions and Local teams with the objective that the company is able to timely identify changing market developments and respond accordingly. Updating our terminal portfolio based on the strategic criteria, shifting our portfolio further towards industrial terminals, chemicals, LNG, LPG and chemical gases.
Energy Transition brings both opportunities and uncertainties Medium to Low (legislation Strategic assessment program takes into account the long-term 3 The speed and precise direction of the energy transition is not fully long term and infrastructure impact of the energy transition known. At the same time, it is observed that the Covid-19 pandemic protection) to High Dedicated focus in considering potential energy market transition impacts appears to accelerate the energy transition. Nevertheless, it is clear (opportunities and and opportunities. Active role in developments demonstrating that this development impacts global products flows: adapting to changing commitment to opportunities that the energy transition could bring: • Increased environmental legislation leading to higher capital market needs) • Emphasising the company as logistics service provider of vital products expenditure levels (e.g.: improved vapor recovering treatment for end consumer use demonstrating a broad product base. systems) and changing operating requirements. • Setting up a new global New Energies unit ensuring focus on technology • Environment-induced regulations also create opportunities (Europe: and business development in the field of renewable energies. IMO 2020) with the need for further segregation of products • Continuous assessment of the impact on Vopak and the oil and gas considered to increase in storage tank demand. industry of agreements and directions per United Nations Global • Demand for oil-based fuels decreasing in specific regions due to Climate Change Conference (latest being COP25) and development lower economic growth, electrification of vehicles, changes in of other international and national agreements oil-based fuels (diesel v gasoline) and more fuel-efficient cars. This • Sustainability being an integral part of the management agenda. may result in assets that service certain fuel types becoming obsolete. Effective monitoring of: • Increasing overall negative sentiment towards fossil fuel usage. This • Existing and changing compliance requirements in place and follow can for example have a negative impact on recruitment possibilities up of requirements as necessary. as potential employees inappropriately consider the company a pure • Longer-term expected changes in demand for certain product types fossil fuel player. in order to adjust the asset base in a timely manner (e.g. conversions, divestments, demolitions) to successfully adapt to these expected changes.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 121
Risk Risk description Risk Horizon Risk appetite Mitigating actions Development Exposure to (crude) oil and gas market price developments leading Short to Low to high Continued focused strategy execution 4 to risks and opportunities medium term Providing storage and handling services for structural product flows; Fluctuating movements in (crude) oil and gas market pricing has limiting exposure to potentially more volatile trading markets. In addition, consequences for our customers putting pressure on the value chain having a well-diversified global terminal network supporting different although this can offer storage opportunities in the short term. market/product combinations. Differences per region are observed.
Geopolitical developments, unpredictable by nature, continue to Medium to Low to medium The well-diversified global terminal network of Vopak supports 5 present challenges to our business going forward in both emerging long term different market/product combinations, reducing dependency and non-emerging markets of locations and products Geopolitical developments such as trade sanctions and renegotiation In seeking growth opportunities, Vopak avoids business development of trade agreements can lead to unexpected and significant changes projects in countries with an undue high geopolitical risk profile unless the in product flows. In addition, changes in governments can lead to risk can be mitigated or is compensated by higher returns. Developments uncertainty of the Government’s stance towards energy programs. are continuously monitored – including impact assessments by a combination of local management, Division and Global.
The diversified terminal portfolio of the Group ensures that adverse geopolitical developments in a specific region has a significant undue effect.
Increasing competition and overcapacity can affect our market Medium to Low to medium Service Leadership and Operational Leadership are cornerstones 6 position and earnings potential long term of our competitive position Increased storage capacity constructed by existing and new Service improvement objectives and optimisation of assets are key competitors, which increases competition puts pressure on our elements of our strategy to at least maintain our competitive position occupancy rates, pricing and contract durations. The extent varies in each market in which we operate. per location. Good insight into existing markets combined with local entrepreneurship which ensure that we capture business development opportunities before the competition does. Leadership programs for senior management aimed at harnessing a better competitive position and improving our way of doing business.
Increasing digitisation (MOVES) moving to real-time data to improve service performance and cost efficiency. Dedicated programs to invest in innovation and new technologies will further improve Vopak’s service offering and reduce costs.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 122
Operational risks
Risk Risk description Risk Horizon Risk appetite Mitigating actions Development Climate Change: a global issue presenting both risks and Medium to Low to high Vopak has embraced and embedded the TCFD framework in its 7 opportunities for Vopak long term process to create awareness and assess exposures and developments Climate Change consists of various segments of risks to which Vopak The process is guided by a multidisciplinary team and resulted in a risk is (potentially) exposed. These segments could briefly be categorized and opportunity assessment, based on IPCC and IEA scenarios, regarding in physical risks (chronic risks and extreme weather events), market physical risks, market risks and policy developments. The results of the risks (changing market dynamics, product- and technological assessment were shared during the ‘Climate Day’, involving senior developments) and policy developments (legislation, reputation). management of Vopak. Regarding the physical risks, Vopak has performed stress tests for various terminals to identify the exposure to climate change and extreme weather events.
This has led to enhanced investments in measures against adverse weather and climate induced conditions and leverage of Global expertise and technical knowledge for optimal cost-effective solutions.
Vopak has set ambitious targets of reducing its own environmental footprint
and lowering its own emissions, including CO2 and VOC. Vopak’s ambition is to be climate neutral by 2050.
Occurrence of a major personal and/or process safety incident Short term Very low Safety is our highest priority 8 and environmental risk Within Vopak, we have continuous attention to ensuring our safety culture Incidents negatively affect the lives and health of not only staff working is at the required high level, through every level of the organization. Vopak at a Vopak location but also those in close proximity. Our ‘License to Fundamentals, Safety Standards and Vopak Way Standards are critical Operate’ could be affected impacting our earnings. Indicidents expose tools for clearly providing procedures and instructions for safe working the company to potential liabilities and will most likely have an adverse practices – regardless of geography or local laws and regulations that effect on the company’s reputation. could be less strict.
We have an Annual Audit Plan, ‘Trust and Verify’ Program, ‘Assure’ Program and Behavioral Safety Reviews in place to safeguard adherence to the required safety and quality standards.
Large complex construction projects, not delivered timely, Medium to Low Vopak Project Management standard for mandatory application to 9 within budget or with the required quality long term all projects that fit within the criteria for its usage Projects under development represent sizeable long-term investments A robust multi-disciplinary investment proposal decision-making process and are recognized as being individually complex due to different is in place. Guidance is provided by the global functions and (external) business, engineering, financing, environmental, cultural and political experts during all stages of the project. The use of Global Engineering circumstances. When projects are not effectively managed in terms and Global Projects provides a common approach and the sharing of of safety, cost, time and quality, increased costs and lost revenues experience in developing new projects. Lessons learned reviews are can be detrimental to the desired end result. performed and shared within the company for future developments.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 123
Risk Risk description Risk Horizon Risk appetite Mitigating actions Development Unable to deliver digitalization strategy Medium to Low Dedicated approach and governance structure for program 10 Key to our strategy is effective digitalization including innovation, long term management in place for MOVES with full Senior Leadership Focus organized centrally providing improved service offering and process Vopak considers full embedding of system usage critical for success. efficiency through real-time data availability. The impact on our current Dedicated sessions at Leadership courses have been organized to ensure way of working and organizational change is significant but necessary Senior Leadership is trained to embrace and drive the change that in order to harness the full benefits. This requires clear leadership successful digitalisation requires. A Business Impact Analysis is taking embracing the changes and opportunities offered. Legacy systems place at each location prior to the roll-out. A robust project management until full roll-out of new systems have to be maintained but are ageing approach is applied and governance in place ensuring sufficient attention with the risk of disruption. is given to the needs of legacy systems.
Core systems are developed in-house to ensure that the functionality of the systems meets the business requirements to the highest extent possible.
Risk of cyber breach of our IT and/or OT systems Short to Low Cyber security is a ‘top of mind’ priority within Vopak 11 A cyber breach could have various causes, e.g. via virus and malware medium term We have our comprehensive IT/OT security program (COINS) in place to attacks, ransomware and unauthorized access attempts. Such a breach address IT and OT security globally. On a daily basis we monitor ‘cyber’ could lead to confidentiality, integrity and availability (data) issues for the attacks on our global systems for follow up. company or hamper our operations, negatively impacting our reputation, financial position, operations, and potentially lead to costs related to recovery and forensic activities.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 124
Legal, compliance and social risks
Risk Risk description Risk Horizon Risk appetite Mitigating actions Development Complex and changing laws and regulations can negatively impact Short to Very low Operating and Business compliance is non-negotiable 12 being Business, Operational and Environmental compliant medium term Terminal management is primarily responsible for maintaining a robust Obtaining, renewal and/or revisions to permits and licenses for product general and permit compliance program. Division/Global supports and storage from local and national governments, as well as compliance with involvement of external specialists are used when unclear. Operating local laws and regulations are essential to start or continue operating our permit compliance is being monitored at various levels within the company terminals. Governments are becoming stricter often due to failings/ and is a critical element of Vopak’s Global Assure program. Permit status is incidents in the industry, regulations are frequently changing and/or can considered a critical path in all project development activity and is actively be unclear making 100% compliance at all times at all locations globally monitored through Steering Committees. a challenge. However, Vopak’s objective is to ensure full compliance. Uncertainties given changing or unclear requirements can also arise Global policies and guidelines are in place addressing business compliance when applying for permit renewals/applications. requirements. The compliance committee ensures that appropriate compliance processes are in place for dedicated compliance topics and More stringent demands on environmental requirements as required by that the principal compliance risks are identified and mitigated our permits may lead to additional sustaining capex investments which can not always be recovered from customers. Commercial teams are in continuous dialogue with our customers on increasing compliance and sustainability investment with the aim of recovering (part of) these additional investments via the storage and handling fees.
Behavior not in line with Vopak values Short to Clear guidance on culture, values and behavior for every employee 13 Individuals and/or groups of individuals can behave in a manner that medium term At all levels of the company management sets the highest standards in is not in line with our values which can lead to financial, business respect of desired culture, values and behavior based on the five global and reputational consequences. It is recognized that certain regions/ Vopak Values and the Vopak Code of Conduct. Our Vopak Values are countries are more susceptible to having a culture not in line with globally implemented and positively and actively embedded in our culture. the Vopak Values. Adhering to the Vopak Values is non-negotiable. Whistleblower rules are available globally for all terminals. All whistleblower cases are followed up and investigated in line with Vopak’s policies.
Reputational damage to Vopak as a brand, company and employer Short to Very low Vopak is very much aware of its social responsibility, role and 14 Sustainability, Climate Change and societal developments are becoming medium term involvement in today’s society increasingly important topics. The (public) perception in terms of It is Vopak’s responsibility to do what is reasonably possible to maximize sustainable developments and societal developments is both a risk our contribution to society and the environment and minimize the negative and opportunity to Vopak. impact the company may have on both. We work hard to reduce our environmental footprint and minimize any negative impact of our operations on people’s safety, health and wellbeing. The Vopak Values and Code of Conduct serve as our moral compass and we embrace selected UN Sustainable Development Goals (SDGs) to create a focus on where we can contribute to society. Our ambition is to be the sustainability leader in our industry and to be as good as the safest and most sustainable of our customers.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 125
Other general (inherent) risks not considered principal risks
Strategic theme Description
Foreign Exchange As a globally-operated company, Vopak is confronted with money flows that are not in its functional (Euro) currency. Operating globally provides an extent of ‘natural hedging’ but foreign exchange exposure risk exists. This risk is continuously reviewed and measures taken to limit the exposure in line with the foreign exchange policy of Global Treasury. Our financial risks are described in detail in Section Financial risk management of the Consolidated Financial Statements.
Refinancing Vopak is a capital-intensive company with long-term investments. Long-term access to funds is critical for achieving the strategic objectives of the company. Refinancing and liquidity risks are not and liquidity considered principal risks due to the effectiveness of the mitigating actions. Vopak’s funding strategy is focused on ensuring continued access to capital markets so that funding capital is available at a time of our choice and at an acceptable cost. The development of our Senior Net Debt: EBITDA ratio is continuously monitored and discussed on a regular basis in the Strategic Finance Committee, the Executive Board, the Audit Committee and the Supervisory Board to ensure that the company remains within its covenant ratios. A clear funding policy with respect to subsidiaries and joint ventures is in place. Group liquidity requirements are monitored continuously. Long-term liquidity risks are reviewed each quarter and before every significant investment. Active cash management takes place on a daily basis.
Liquidity risks are described in more detail in Section Financial risk management of the Consolidated Financial Statements.
Insurance A general business risk exists that losses are suffered due to inappropriate coverage of the incident by third-party insurers. Our Global Insurance Policy aims to strike the right balance between arranging insurance to cover Vopak’s risks and financing adverse implications ourselves. The principal factors underlying our insurance policy are risk tolerance and risk transfer costs. On this basis, Vopak has purchased worldwide insurance cover for a wide range of risks, such as environmental and third-party liability, property damage, business interruption and cyber-related activities. The financial credit ratings of the insurance companies involved are reviewed on a regular basis and, where appropriate, risks are spread across several insurance companies.
Tax and Tax related Vopak operates terminals and other activities in many different countries. As tax laws and regulations differ per country and can be complex, the company runs the inherent risk of non-compliance with the local tax legislation and the tax policy of the company. The Vopak Control Framework has a dedicated section stipulating the internal controls to address the risks related to tax and which enforce compliance with the group tax policy. Furthermore, the highly skilled tax experts at the Global Tax department assist local and divisional management in complying with the tax requirements and monitoring the effectiveness of the internal controls relating to tax as well as the tax position of the group.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 126
Internal Control In addition to audits executed by Global Internal Audit, which includes a fraud vulnerability assessment Vopak has identified sixteen key business processes and has internal controls, designed in a principle- when a business process audit is executed, the maturity of key control implementation per operating based manner, to address risks foreseen in each of the processes. This principle-based internal control company is assessed each year through the completion of the Control Risk Self-Assessment (CRSA). framework is rolled out to all operating companies. The CRSA covers the sixteen key processes and related controls including those specifically directed at fraud and corruption. Local management (‘first line’), supported by Divisions and Global Functions, is responsible for ensuring this framework is implemented, operating effectively and key risks are managed. Divisions and Global Complementing the CRSA, are a number of additional functional- and regional-specific monitoring Functions are ‘second line’ responsible for the monitoring of internal controls locally including assessing activities undertaken throughout the year by the Global Functions all with the objective to assess the their effectiveness. The ‘third line’ is Global Internal Audit providing independent assurance on internal extent of implementation and effectiveness of expected controls and establish further improvements control existence and effectiveness. from a functional responsibility perspective.
Internal control framework Policies continued to be updated as appropriate during 2020. The introduction of new IT systems via the MOVES program improves our control environment through the further standardization of processes, Supervisory Board/Audit Committee systems and allowing for increased transparency and monitoring of actions.
Executive Board The Executive Board is assisted in fulfilling its responsibilities with regards to internal controls by the Compliance Disclosure Risk Risk Committee, the Compliance Committee and the Disclosure Committee. These three Committees Committee Committee Committee have an important role in the company’s overall internal control framework by providing cross-functional and cross-divisional advisory insight on key topics directly to the Executive Board.
Senior Management The internal control framework is reviewed and updated periodically to ensure control design and guidance remains relevant and effective for the organization.
1st line of defense 2nd line of defense 3rd line of defense External financial audit Terminal Division/Global Management Review Cycle Policies & Ensuring all procedures Management Financial control Global Vopak’s Key to the control process is the regular reporting cycle. Monthly and quarterly management reports are providing controls Risk management Internal Audit pricipal risks prepared by all operating companies and Divisions including joint ventures in line with clearly defined detailed are covered control Security by mandatory reporting requirements. The reports and related discussions between senior management, guidance Internal control Quality ‘Assurance’ including but not limited to the Executive Board, cover not only financial but also key operational, measures Compliance sustainability, human resources and commercial performance indicators aimed at monitoring the achievement of strategic objectives. A critical element of these discussions is comparing progress
Vopak Key Control Framework against prior-year performance and Vopak’s Annual Budget which, together with the two subsequent plan years, is reviewed and approved by the Executive Board for all Divisions and operating companies Implementation responsibility Monitoring / guidance responsibility each year.
Role of Internal Audit The primary role of Global Internal Audit is to provide independent assurance and advise the Executive Board in relation to its responsibility to ensure both the existence and effectiveness of internal controls in order to safeguard the company’s goals. A broad range of audits are executed of an operational, investigative and compliance nature with the audit of financial external reports being the responsibility of Vopak’s external statutory auditor. Advising and consulting activities also take place providing internal control input to projects undertaken by the organization to support functional owners.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Risk management & internal control 127
Internal audit to preserve and create value Continuous evaluation of the Global Internal Audit function takes place. The results are reported to the Executive Board and Audit Committee on an annual basis. In addition, an externally performed quality assurance audit by the Dutch Institute of Internal Auditors takes place on a five-year basis. The first
Strategic Governance review at the end of 2016 was positive and re-confirmed that work is performed in accordance with performance focus the International Internal Auditing Standards. An evaluation of the function by the Executive Board and the Audit Committee has taken place during the year. Value Performance Regulation Value creation and efficiency and Control preservation Management assessment, Letters of Representation Operational Control and and In-Control Statement performance compliance Management consider that the processes in place as described including those in the Corporate Governance chapter are of a maturity that enables implementation and effectiveness of risk Consulting Assurance (In-Control management and internal control to be assessed with the view that there have been no material Statement) deficiencies in the internal risk management and control systems relating to the risks observed during the financial year. Further improvements noted, such as ongoing policy refinement and the update of the IT systems, serve to further improve our maturity level and not to change the processes. The view New Fraud and Operational, IT that there are no material deficiencies is underpinned by internal audit findings, the Management Letter ‘development’ whistleblower and Compliance reviews/advice investigations audits from the external auditor and the Letter of Representation that is signed by Terminal Management, Divisional Finance Directors, Division Presidents and Global Directors at the end of each half year and full year. This Letter represents the key elements of internal control and full disclosure of deviations to that Clear and objective in findings; control as appropriate. The results of this process including deviations are specifically discussed with Constructive and realistic in recommendations the Executive Board and, together with the results of the various monitoring and assurance activities as described above (which are explicitly re-evaluated by both Global Control & Business Analysis and Global Global Internal Audit reports directly to the Executive Board. Its activities are also overseen by the Internal Audit for the purposes of the In-Control Statement at year end) provide input for the In-Control (Audit Committee of the) Supervisory Board. The Internal Audit Charter is endorsed by both the Executive Statement issued by our Executive Board. Board and the Audit Committee. The core audit team is located at the Global Head office, often supplemented by subject matter experts either from the business or external support as appropriate. The In-Control Statement issued by the Executive Board is included directly after the Financial Statements. The annual internal audit plan is developed using a risk-based approach focusing on key objectives of the company and risks relating to those objectives. The Global Internal audit universe includes all processes, entities and activities within the company, including Global and Divisional functions. The plan takes into account the feedback resulting from the dialogue with Senior Leadership. Throughout the year, the results of all audits and advisory activities are shared and discussed with the Executive Board and discussed each quarter with the Audit Committee. Progress against the plan is reported.
The follow up of audit findings is the responsibility of the auditee with monitoring thereof and subsequent closure being the responsibility of the Division and/or Global as appropriate. The outcome of this process is formalized biannually with reporting to Global Internal Audit through the ‘audit findings follow-up’ system. Exceptions to what is expected are followed up proactively with Divisions by Global Internal Audit. The audit findings follow-up meetings also take into account follow-up from reviews undertaken by commercial and external financial auditors.
Vopak Annual Report 2020 Shareholder information Shareholder information
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Shareholder information 128 Shareholder information
In EUR 2020 2019 Investor Relations Share price start of the year 48.60 39.12 Vopak conducts an open and active information policy for all its stakeholders. The aim of Vopak’s investor Highest share price 54.24 51.96 relations is to provide relevant information to all stakeholders and to ensure that this information is Average closing share price 47.31 43.77 complete, consistent, accurate, relevant and timely disclosed to all parties. Information is provided Lowest share price 40.27 36.05 through annual and half year reports, quarterly interim updates, press releases and investor Share price at year-end 42.99 48.33 presentations, which are all available on the Vopak website. Vopak is transparent and non-discriminatory Free float 52% 52% in disclosing information to investors and other stakeholders. A separate agreement on information Average number of shares traded per day 398,654 319,733 sharing has been concluded with the major shareholder HAL Holding N.V. We refer to note 7.3 of the Market capitalization at year-end (in EUR billion) 5.4 6.2 Consolidated Financial Statements for more information.
Vopak participated in international roadshows, attended broker-organized equity conferences and a p o undertook investor telephone calls to engage with shareholders and investors. Due to Covid-19, most n of these engagements were hosted in a virtual manner in 2020. Vopak held more than 250 meetings
20 with shareholders and investors this year.
0 Vopak held press conferences and hosted live webcasts for financial analysts, investors and other 00 stakeholders following the publication of the annual results and half-year results. To accommodate the 0 growing interest in the performance delivery and strategy execution in a year with more uncertainty 0 due to Covid-19, the regular half-year webcast was expanded. Vopak’s Executive Board, together with
0 3 global product directors provided an update on performance, existing strategy and markets in which Vopak operated. The publication of the quarterly interim results were followed by live webcasts. All 0 webcasts could be attended live and on-demand via Vopak’s website. Information presented at these meetings was also published on the website. an e ar Apr a un ul Au ept t o e
Euronext Amsterdam AEX Index Vopak Vopak complies with the rules and regulations of the Dutch Financial Markets Authority (AFM) and International Financial Reporting Standards (IFRS), as endorsed by the European Union, in all its publications.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Shareholder information 129
Information per ordinary share of EUR 0.50 Stock exchange listing Vopak shares are listed on the Euronext stock exchange in Amsterdam, the Netherlands, and Vopak In EUR 2020 2019 is a constituent of the Amsterdam Midkap Index (AMX), ticker symbol VPK (ISIN no. NL0009432491). Basic earnings 2.38 4.47 Options on Vopak shares are also traded on Euronext Amsterdam. Basic earnings -excluding exceptional items- 2.42 2.80 Diluted earnings 2.38 4.46 Silent periods Diltuted earnings -excluding exceptional items- 2.41 2.80 Silent periods are the periods prior to the publication of financial results. In principle, no meetings are Equity attributable to holders of ordinary shares 23.77 23.88 held with and no presentations are given to financial analysts and investors during this period. No other Dividend (proposal) 1.20 1. 15 communication with analysts and investors takes place unless it relates to the factual clarification of Payout ratio -excluding exceptional items- 50% 41% previously disclosed information. Usually, the length of the silent period is 31 calendar days prior to publication of the annual and half year results and quarterly interim updates.
Shares outstanding Bilateral contracts Vopak may engage in bilateral contacts with existing and potential shareholders. The main objective 2020 2019 would be to explain Vopak’s strategy and operational performance and answer questions. Vopak takes Basic weighted average number of ordinary shares 126,524,451 127,637,900 the Dutch Corporate Governance Code and other applicable laws and regulations into account when Weighted average number of ordinary shares including dilutive effect 126,690,044 127,983,107 engaging in bilateral contacts with shareholders. Total number of shares outstanding (including treasury shares end of period) 125,740,586 127,835,430 The following guidelines apply: Treasury shares end of period 345,736 209,984 • A dialogue with shareholders outside the context of a formal shareholders’ meeting can be useful Total voting rights at year-end 125,394,850 127,625,446 for both investors and Vopak. • Vopak reserves the right to determine, at its sole discretion, whether it will accept invitations from shareholders, or parties representing shareholders, to engage in such a dialogue. Vopak may ask for a p o a a further clarification of the views, aims and investment objectives of such shareholders before n R accepting or rejecting an invitation to engage in dialogue outside the context of a formal shareholders’ meeting. 0 • Vopak communicates as openly as possible and legally allowed to maximize transparency. In bilateral 0 contacts only information is shared that is generally available to other investors in the broadest sense of the word. 0 • Responses to third-party publications, such as analyst reports or draft reports, are only given by 0 referring to public information and published guidance. Comments on these reports are given only
20 with regard to incorrect factual information. • Vopak’s contacts with investors and sell-side analysts shall, at all times, comply with the applicable 0 rules and regulations, in particular those concerning selective disclosure, price sensitive information and equal treatment. 20 20 20 20 2020
Vopak
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Shareholder information 130
Dividend policy Financial calendar Vopak’s dividend policy targets to pay an annual stable to rising cash dividend in balance with a management view on a payout ratio range of 25-75% of the net profit excluding exceptional items 21 April 2021 Publication of 2021 first-quarter interim update attributable to holders of ordinary shares and subject to market circumstances. 21 April 2021 Annual General Meeting 23 April 2021 Ex-dividend quotation The net profit excluding exceptional items that forms the basis for dividends to be declared may be 26 April 2021 Dividend record rate adjusted, for instance, for the financial effects of one-off events, such as changes in accounting policies, 29 April 2021 Dividend payment date acquisitions and divestments. 28 July 2021 Publication of 2021 half-year results 12 November 2021 Publication of 2021 third-quarter interim update Vopak proposes a dividend of EUR 1.20 per ordinary share over 2020 (2019: EUR 1.15). The dividend 16 February 2022 Publication of 2021 full-year results increase reflects Vopak’s continued resilient performance throughout a turbulent 2020.
Vopak shareholders Vopak’s shares are held by an international and diversified shareholder base. Pursuant to the Financial Supervision Act, a shareholding of 3% or more in a Dutch company must be disclosed to the AFM. As per the AFM register, the largest shareholders in Vopak at 31 December 2020 were:
Ordinary shareholdings Date of notification HAL trust 48.15% 01/01/2015 Magellan Asset Management Ltd >3.00% 13/06/2019 BlackRock, Inc >3.00% 19/11/2019
Vopak Annual Report 2020 Financial Statements Financial Statements
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
133 Consolidated Financial Statements 207 Company Financial Statements 212 Executive Board declaration 213 External auditor’s reports
Financial Statements
Vopak AnnualAnnual ReportReport 20202020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Financial Statements 132 Financial Statements and notes
Consolidated Financial Statements 133 Section 5 Capital structure 167 Note 9.9 Financial assets and liabilities and credit risk 203 Consolidated Statement of Income 133 Note 5.1 Issued capital, share premium, treasury shares and Note 9.10 New standards and interpretations not yet Consolidated Statement of Comprehensive Income 133 capital management 167 implemented 203 Consolidated Statement of Financial Position 134 Note 5.2 Other reserves 168 Note 9.11 Principal subsidiaries, joint ventures, associates Consolidated Statement of Changes in Equity 135 Note 5.3 Retained earnings 169 and investments 204 Consolidated Statement of Cash Flows 136 Note 5.4 Non-controlling interests 169 Note 9.12 Events after the reporting period 206 Note 5.5 Interest-bearing loans and net debt 170 Section 1 Basis of preparation 137 Note 5.6 Net finance costs 174 Company Financial Statements 207 Note 1.1 Basis of preparation 137 Company Statement of Financial Position Section 6 Financial risk management 175 before Profit Appropriation 207 Section 2 Group operating performance 140 Note 6.1 General 176 Company Statement of Income 207 Note 2.1 Segment information 140 Note 6.2 Derivatives and hedge accounting 177 Note 2.2 Exceptional items 143 Note 6.3 Currency risk 180 Notes to the Company Financial Statements 208 Note 2.3 Revenues 144 Note 6.4 Interest rate risk 183 Note 1. General 208 Note 2.4 Other operating income 145 Note 6.5 Equity securities price risk 184 Note 2. Participating interests in Group companies 208 Note 2.5 Personnel expenses 146 Note 6.6 Credit risk 184 Note 3. Loans granted 208 Note 2.6 Other operating expenses 147 Note 6.7 Liquidity risk 185 Note 4. Shareholders’ equity 209 Note 2.7 Result of joint ventures and associates 147 Note 5. Interest-bearing loans 209 Note 2.8 Translation and operational currency risk 148 Section 7 Governance 187 Note 6. Derivative financial instruments 210 Note 2.9 Cash flows from operating activities (gross) 148 Note 7.1 Remuneration of Board members 187 Note 7. Pension and other employee benefits provisions 210 Note 7.2 Long-term incentive plans (LTIPs) 187 Note 8. Personnel expenses 210 Section 3 Strategic investments and divestments 149 Note 9. Income taxes 211 Note 3.1 Acquisition and divestment of subsidiaries 149 Section 8 Income taxes 192 Note 10. Remuneration of Supervisory Board members Note 3.2 Intangible assets 150 Note 8.1 Income taxes 192 and Executive Board members 211 Note 3.3 Property, plant and equipment - owned assets 151 Note 8.2 Deferred taxes 193 Note 11. Contingent liabilities 211 Note 3.4 Leases 153 Note 3.5 Joint ventures and associates 156 Section 9 Other disclosures 195 Executive Board declaration 212 Note 3.6 Assets held for sale 160 Note 9.1 Earnings per ordinary share - number of shares 195 Note 3.7 Depreciation and amortization 161 Note 9.2 Loans granted and finance lease receivable 196 External auditor’s reports 213 Note 3.8 Impairment tests and impairments 162 Note 9.3 Impact of COVID-19 pandemic 197 Independent auditor’s report 214 Note 9.4 Pensions and other employee benefits 197 Assurance report of the independent auditor with respect Section 4 Working capital 165 Note 9.5 Provisions 200 to the 2020 220 Note 4.1 Changes in working capital 165 Note 9.6 Investments and other financial assets 201 Sustainability Information of Koninklijke Vopak N.V. 220 Note 4.2 Trade and other receivables and related credit risk 165 Note 9.7 Investment commitments undertaken 201 Our responsibilities for the review of the Note 4.3 Trade and other payables 166 Note 9.8 Contingent assets and contingent liabilities 202 sustainability information 221
Vopak Annual Report 2020 Consolidated Financial Statements Consolidated Statement of Income Consolidated Financial Statements Consolidated Statement of Comprehensive Income
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 133 Consolidated Financial Statements
Consolidated Statement of Income Consolidated Statement of Comprehensive Income
In EUR millions Note 2020 2019 In EUR millions Note 2020 2019 Revenues 2.3 1,190.0 1,252.6 Net profit 330.5 603.8 Other operating income 2.4 60.0 276.5 Exchange differences on translation of foreign operations 5.2, 5.4 - 191.0 47.2 Total operating income 1,250.0 1,529.1 Net investment hedges 5.2 61.5 - 13.3 Personnel expenses 2.5 331.2 347.0 Use of exchange rate differences on translation of foreign operations and use of net investment hedges 5.2, 5.4 2.4 - 12.2 Depreciation and amortization 3.7 299.5 290.7 Effective portion of changes in fair value of cash flow hedges 5.2, 5.4 3.1 10.0 Impairment 3.8 30.1 1 7. 2 Use of effective portion of cash flow hedges to statement of Other operating expenses 2.6 260.5 288.2 income 5.2 - 0.3 - 2.6 Total operating expenses 921.3 943.1 Share in other comprehensive income of joint ventures and associates 5.2 - 0.8 - 14.9 Operating profit 328.7 586.0 Other comprehensive income that may be reclassified to Result joint ventures and associates 2.7 161.2 161.8 statement of income in subsequent periods - 125.1 14.2 Group operating profit (EBIT) 489.9 747.8 Fair value change other investments 5.2, 9.6 - 1.9 9.1 Interest and dividend income 5.6 5.9 8.8 Remeasurement of defined benefit plans 5.3, 9.4 - 5.2 - 5.5 Finance costs 5.6 - 92.2 - 94.5 Other comprehensive income that will not be reclassified to Net finance costs - 86.3 - 85.7 statement of income in subsequent periods - 7.1 3.6 Profit before income tax 403.6 662.1 Other comprehensive income, net of tax - 132.2 1 7. 8 Income tax 8.1 - 73.1 - 58.3 Net profit 330.5 603.8 Total comprehensive income 198.3 621.6
Attributable to: Attributable to: Holders of ordinary shares 300.9 571.0 Holders of ordinary shares 180.4 584.5 Non-controlling interests 29.6 32.8 Non-controlling interests 1 7. 9 37.1 Net profit 330.5 603.8 Total comprehensive income 198.3 621.6 Items are disclosed net of tax. The income tax relating to each component of other comprehensive income is disclosed Basic earnings per ordinary share (in EUR) 9.1 2.38 4.47 in note 8.1. Diluted earnings per ordinary share (in EUR) 9.1 2.38 4.46
Vopak Annual Report 2020 Consolidated Statement of Financial Position
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 134
Consolidated Statement of Financial Position
In EUR millions Note 31-Dec-20 31-Dec-19 In EUR millions Note 31-Dec-20 31-Dec-19
ASSETS EQUITY Intangible assets 3.2 173.2 164.8 - Issued capital 5.1 62.9 63.9 Property, plant & equipment - owned assets 3.3 3,798.9 3,640.8 - Share premium 5.1 194.4 194.4 Property, plant & equipment - right-of-use assets 3.4 632.2 503.0 - Treasury shares 5.1 - 15.0 - 8.9 - Joint ventures and associates 3.5 1,319.4 1,272.8 - Other reserves 5.2 - 317.0 - 105.9 - Finance lease receivable 9.2 28.6 28.5 - Retained earnings 5.3 3,055.4 2,903.8 - Loans granted 9.2 91.0 86.7 Equity attributable to owners of parent 2,980.7 3,047.3 - Other financial assets 9.6 36.5 30.1 Non-controlling interests 5.4 144.9 147.8 Total financial assets 1,475.5 1,418.1 Total equity 3,125.6 3,195.1 Deferred taxes 8.2 36.9 30.8 LIABILITIES Derivative financial instruments 6.2 9.1 19.4 Interest-bearing loans 5.5 1,616.3 1,394.5 Other non-current assets 6.0 6.3 Lease liabilities 5.5 668.5 534.7 Total non-current assets 6,131.8 5,783.2 Derivative financial instruments 6.2 5.4 – Trade and other receivables 4.2 276.1 296.1 Pensions and other employee benefits 9.4 49.0 42.4 Prepayments 36.6 27.3 Deferred taxes 8.2 183.3 181.5 Derivative financial instruments 6.2 5.1 28.5 Provisions 9.5 22.2 35.9 Cash and cash equivalents 5.5 68.3 94.5 Other non-current liabilities 14.3 20.8 Assets held for sale 3.6 – 143.9 Total non-current liabilities 2,559.0 2,209.8 Total current assets 386.1 590.3 Bank overdrafts and short-term borrowings 5.5 214.3 184.5 Interest-bearing loans 5.5 127.9 285.9 Lease liabilities 5.5 30.7 30.2 Derivative financial instruments 6.2 20.6 38.3 Trade and other payables 4.3 361.7 344.1 Taxes payable 55.5 42.1 Pensions and other employee benefits 9.4 0.2 1. 3 Provisions 9.5 22.4 24.2 Liabilities related to assets held for sale 3.6 – 18.0 Total current liabilities 833.3 968.6 Total liabilities 3,392.3 3,178.4
Total assets 6,517.9 6,373.5 Total equity and liabilities 6,517.9 6,373.5
Vopak Annual Report 2020 Consolidated Statement of Changes in Equity
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 135
Consolidated Statement of Changes in Equity
Equity attributable to owners of parent
Retained Non-controlling In EUR millions Note Issued capital Share premium Treasury shares Other reserves earnings Total interests Total equity Balance at 31 December 2018 63.9 194.4 - 7.3 - 124.5 2,556.3 2,682.8 161.5 2,844.3 Initial application IFRS 16 – – – – - 85.1 - 85.1 - 9.4 - 94.5 Balance at 1 january 2019 63.9 194.4 - 7.3 - 124.5 2,471.2 2,597.7 152.1 2,749.8
Net profit – – – – 571.0 571.0 32.8 603.8 Other comprehensive income, net of tax – – – 18.6 - 5.5 13.1 4.7 1 7. 8 Total comprehensive income – – – 18.6 565.5 584.1 37.5 621.6
Dividend paid in cash 5.3, 5.4 – – – – - 140.5 - 140.5 - 38.8 - 179.3 Capital injection 5.4 – – – – – – 4.1 4.1 Transaction with non-controlling interests 5.4 – – – – – – - 9.0 - 9.0 Acquisition non-controlling interest subsidiaries 5.4 – – – – – – 1. 9 1. 9 Purchase treasury shares 5.1 – – - 2.6 – – - 2.6 – - 2.6 Measurement of equity-settled share-based payment arrangements 5.3, 7.2 – – – – 8.6 8.6 – 8.6 Vested shares under equity-settled share-based payment arrangements 5.3, 7.2 – – 1. 0 – - 1.0 – – – Total transactions with owners – – - 1.6 – - 132.9 - 134.5 - 41.8 - 176.3
Balance at 31 December 2019 63.9 194.4 - 8.9 - 105.9 2,903.8 3,047.3 147.8 3,195.1
Net profit – – – – 300.9 300.9 29.6 330.5 Other comprehensive income, net of tax – – – - 120.5 – - 120.5 - 11.7 - 132.2 Total comprehensive income – – – - 120.5 300.9 180.4 1 7. 9 198.3
Dividend paid in cash 5.3, 5.4 – – – – - 146.1 - 146.1 - 24.6 - 170.7 Capital injection 5.4 – – – – – – 3.8 3.8 Purchase treasury shares 5.1 – – - 8.0 – – - 8.0 – - 8.0 Share buyback/cancellation of shares issued 5.1 - 1.0 – – - 99.1 – - 100.1 – - 100.1 Measurement of equity-settled share-based payment arrangements 5.3, 7.2 – – – – 4.5 4.5 – 4.5 Vested shares under equity-settled share-based payment arrangements 5.3, 7.2 – – 1. 9 – - 4.0 - 2.1 – - 2.1 Other – – – 8.5 - 3.7 4.8 – 4.8 Total transactions with owners - 1.0 – - 6.1 - 90.6 - 149.3 - 247.0 - 20.8 - 267.8
Balance at 31 December 2020 62.9 194.4 - 15.0 - 317.0 3,055.4 2,980.7 144.9 3,125.6
Vopak Annual Report 2020 Consolidated Statement of Cash Flows
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 136
Consolidated Statement of Cash Flows
In EUR millions Note 2020 2019 In EUR millions Note 2020 2019 Cash flows from operating activities (gross) 2.9 822.2 709.7 Financing: Interest received 5.6 6.7 5.6 Repayment from interest-bearing loans 5.5 - 669.1 - 797.7 Dividend received from investments 5.6 – 2.4 Proceeds from interest-bearing loans 5.5 849.1 640.1 Income tax paid - 54.9 - 71.2 Repayment lease liabilities 3.4 - 26.7 - 30.7 Cash flows from operating activities (net) 774.0 646.5 Interest expenses paid on lease liabilities 3.4 - 21.1 - 22.4 Investments: Finance expenses paid - 94.0 - 89.5 Intangible assets 3.2 - 38.3 - 29.5 Settlement of derivative financial instruments - 5.1 12.7 Property, plant and equipment - growth capex 3.3 - 335.6 - 319.4 Dividend paid in cash 5.3 - 146.1 - 140.5 Property, plant and equipment - sustaining, service Dividend paid to non-controlling interests 5.4 - 24.6 - 38.8 improvement and IT capex 3.3 - 276.9 - 270.3 Transactions with non-controlling interest 5.4 – - 4.9 Joint ventures and associates 3.5 - 73.8 - 75.6 Share buyback/purchase treasury shares 5.1 - 108.1 - 2.6 Other equity investments 3.5 - 8.5 – Proceeds and repayments in short-term financing 27.0 119.0 Loans granted 9.2 - 3.0 - 8.6 Cash flows from financing activities - 218.7 -355.3 Other non-current assets - 0.5 - 0.4 Acquisitions of subsidiaries, including goodwill 3.1 – 1. 9 Net cash flows - 29.2 35.1 Acquisitions of joint ventures and associates 3.5 - 107.4 - 104.8 Exchange differences - 2.3 0.8 Total investments - 844.0 - 806.7 Net change in cash and cash equivalents due to assets held for sale 2.5 - 2.5 Disposals and repayments: Net change in cash and cash equivalents (including bank overdrafts) - 29.0 33.4 Intangible assets 3.2 – 0.1 Net cash and cash equivalents at 1 January (including bank overdrafts) 88.0 54.6 Property, plant and equipment 3.3 2.1 4.0 Joint ventures and associates 3.5 118.2 28.6 Net cash and cash equivalents at 31 December (including bank overdrafts) 59.0 88.0 Loans granted 9.2 0.1 2.0 Finance lease receivable 9.2 5.1 4.9 Assets held for sale/divestments 3.1 131.3 521.3 Total disposals and repayments 256.8 560.9 Cash flows from investing activities (excluding derivatives) - 587.2 - 245.8 Settlement of derivatives (net investment hedges) 2.7 - 10.3 Cash flows from investing activities (including derivatives) - 584.5 - 256.1
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 137
Section 1 Basis of preparation The financial statements were prepared by the Executive Board and approved by the Supervisory Board on 16 February 2021 and are subject to adoption by the shareholders during the Annual Taking into account the characteristics of Vopak’s business and business model, the notes to the General Meeting. financial statements have been grouped into eight thematic sections rather than in consecutive order based on line items in the Consolidated primary statements. Each note in a section starts with the Functional and presentation currency Group’s accounting policies as well as the critical accounting estimates and judgments made. The Consolidated financial statements are presented in euros (EUR), which is the functional and presentation currency of the Vopak Group. All amounts are presented in EUR million and have been This section contains the disclosures relevant for understanding the basis of preparation of the rounded to the nearest EUR 100k, unless otherwise stated. Consolidated financial statements: • Reporting entity Basis of measurement • Statement of compliance The Consolidated financial statements are based on the historical cost basis except for the following • Functional and presentation currency assets and liabilities, which are measured at fair value: derivative financial instruments, other financial • Basis of measurement assets (measured at fair value through other comprehensive income), assets held for sale (when • Changes in accounting policies for 2020 measured at fair value less cost of disposal) and defined benefit pension plans (plan assets measured • Going concern at fair value). • Basis of consolidation • Foreign currency translation No changes in accounting policies for 2020 • Accounting policies, not attributable to a specific section The applied accounting principles adopted in the preparation of the Consolidated financial statements • Use of key accounting estimates and judgments are consistent with those described in Vopak’s 2019 Annual Report.
Note 1.1 Basis of preparation Several IFRS amendments apply for the first time in 2020. However, these do not materially impact the Group’s Consolidated financial statements. Reporting entity Koninklijke Vopak N.V. (Royal Vopak) has its registered office in Rotterdam (the Netherlands). Vopak is Interest Rate Benchmark Reform listed on the Euronext Amsterdam. The Consolidated financial statements of the company for the year Already in 2019, the Group adopted the Interest Rate Benchmark Reform Amendments to IFRS 9, ending on 31 December 2020 contain the financial figures of the company and its subsidiaries (jointly IAS 39 and IFRS 7 as published by the IASB in September 2019 and endorsed by the EU on referred to as the ‘Group’), as well as the interests of the Group in joint ventures and associates. 15 January 2020. This amendment has been consistently applied in 2020.
Vopak is the world's leading independent tank storage provider, specialized in the storage and handling For an overview of the estimated effect of issued, but not yet effective new and amended of liquid chemicals, gases and oil products. IFRS standards and IFRICs on the Vopak Group, reference is made to note 9.10.
Statement of compliance Going concern The Consolidated financial statements have been prepared in accordance with the International Financial The Executive Board has assessed the going-concern assumptions, during the preparation of the Reporting Standards (IFRS) as adopted by the European Union (EU) and also comply with the financial Group's Consolidated financial statements. The Executive Board believes that no events or conditions, reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code, as far as applicable. The including those related to the current COVID-19 pandemic, give rise to doubt about the ability of the accounting policies based on IFRS, as described in this section, have been applied consistently for the Group to continue in operation in the next reporting period. This conclusion is drawn based on years presented by all entities. There were no material changes in the accounting policies applied knowledge of the Group, the estimated economic outlook and identified risks and uncertainties in compared to the previous year. relation thereto.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 138
Furthermore, this conclusion is based on a review of the budget for the next financial year, including When the Group ceases to consolidate or equity account for an investment because of a loss of control, expected developments in liquidity and capital, current credit facilities available including contractual and joint control or significant influence, any retained interest in the entity is remeasured to its fair value with expected maturities and covenants. Consequently, it has been concluded that it is reasonable to apply the change in carrying amount recognized in profit or loss. This fair value becomes the initial carrying the going-concern concept as the underlying assumption for the financial statements. amount for the purpose of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive For further details on the impact of the Covid-19 pandemic to the Vopak Group, reference is income are reclassified to the income statement. made to note 9.3. If the ownership interest in a joint venture or an associate is reduced but joint control or significant Basis of consolidation influence is retained, only a proportional share of the amounts previously recognized in Subsidiaries are entities controlled by the Group. Vopak controls an entity when it is exposed to, or has other comprehensive income is reclassified to profit or loss where appropriate. rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the Transactions eliminated on consolidation: all inter-company balances and transactions, including Consolidated financial statements from the date on which control commences until the date on which unrealized gains and losses on transactions, are eliminated on consolidation. Unrealized gains arising control ceases, using consistent accounting policies. from transactions with joint ventures and associates are eliminated to the extent of the Group's interest in the equity. Unrealized losses are eliminated in the same manner as unrealized gains, but only to the Non-controlling interests in equity and in results are presented separately. Transactions with non- extent that there is no evidence of impairment. controlling interests that do not result in loss of control are accounted for as transactions with shareholders. For purchases of non-controlling interests, the difference between any consideration paid For a list of the principal subsidiaries, joint ventures and associates, reference is made to and the relevant share acquired of the carrying value of the net asset of the subsidiary is recorded note 9.11 of this report. directly in equity. Gains or losses on disposals of non-controlling interests are also recorded directly in equity. Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the Upon initial recognition, a non-controlling interest is measured either at its proportional interest in the fair currency of the primary economic environment in which the entity operates ('the functional currency'). value of the net assets acquired or full fair value, which is elected on a transaction-by-transaction basis. Foreign currency transactions are translated into the functional currency using the exchange rate at the The Group's interests in equity-accounted investees comprise interests in joint ventures and associates. dates of the transactions, or valuation date where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities. the statement of income, except when deferred in other comprehensive income as qualifying cash flow hedges or net investment hedges. Associates are entities in which the Group has significant influence, but no control or joint control, over the financial and operating policies. Upon consolidation, the assets and liabilities of non-Euro entities, including goodwill and fair value adjustments at the time of the acquisition, are translated into euros at the year-end rates of exchange Upon loss of control, the Group derecognizes the assets and liabilities of the subsidiary, any non- (closing exchange rates). The items of the statement of income of foreign activities are translated at the controlling interests and the other components of equity related to the subsidiary. Any surplus or deficit average exchange rates for the reporting period. arising on the loss of control is recognized in profit or loss. The resulting translation differences of the net investments in foreign operations are recognized as foreign currency translation reserve (translation reserve) in other comprehensive income. The same applies to exchange differences arising from loans drawn and other financial instruments to the extent that these hedge the currency risk related to the net investment.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 139
Upon disposal of all or part of an interest in an entity, or upon liquidation of an entity, cumulative currency translation differences related to that entity are recognized in the income statement. When the Use of key accounting estimates and judgments Group disposes of only part of its interest in a subsidiary with a foreign operation, while retaining Preparing the Consolidated financial statements means that the Group must use insights, control, the relevant portion of the cumulative amount is not transferred to profit or loss but reattributed estimates and assumptions that could affect the reported assets and liabilities and the to non-controlling interests. Upon disposal of a foreign activity with a non-controlling interest, the information provided on contingent assets and liabilities as at the statement of financial position cumulative amount relating to the non-controlling interests shall be derecognized, but shall not be date as well as the reported income and expenses. The actual results may ultimately differ from reclassified to profit or loss. A share capital or share premium distribution by an entity is not considered these estimates. The estimates and the underlying assumptions are reviewed on a regular basis. to be a partial disposal when the Group retains its relative legal share in the entity. Adjustments are made in the period in which the estimates were reviewed if the adjustment affects that period, or in the relevant period and the future periods if the adjustment affects both The following main exchange rates are used in the financial statements: current and future periods.
Closing exchange rate Average exchange rate Management insights, estimates and assumptions that could have a significant impact on the financial statements are: EUR 1.00 is equivalent to 2020 2019 2020 2019 • The lease term of our land lease contracts (note 3.4) US dollar 1.23 1. 12 1. 14 1. 12 • Assets held for sale (note 3.6) Singapore dollar 1.63 1.51 1.57 1.53 • Useful life and residual value of property, plant and equipment (note 3.7) Chinese yuan 8.01 7.83 7.87 7.73 • Impairment tests (note 3.8) Australian dollar 1.60 1.60 1.66 1.61 • Derivative financial instruments (note 6.2) Brazilian real 6.38 4.50 5.89 4.42 • Deferred tax (note 8.2) • Provisions (note 9.5).
Accounting policies, not attributable to a specific section Although the COVID-19 pandemic has a limited impact on the Vopak Group, a comprehensive The Group's significant accounting policies are described in the relevant individual notes to the overview of the impact of the COVID-19 pandemic is included in note 9.3. Consolidated financial statements or otherwise stated below. A list of the notes is shown in the table of contents preceding the financial statements.
Offsetting of financial instruments Financial assets and liabilities are offset and the net amount is reported in the balance sheet only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.
Cash flow statement The cash flow statement is prepared based on the indirect method. Cash flows denominated in foreign currencies are translated at average exchange rates. Exchange and translation gains and losses on cash and cash equivalents (including current liabilities arising from short-term credit facilities) are presented separately.
The Consolidated statement of cash flows shows the Group's cash flows from operating, investing and financing activities for the year.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 140
Section 2 Group operating performance Note 2.1 Segment information
This section comprises notes which provide specifications and explanations related to the Group's Accounting policies operating performance for the year, including disclosures on segmentation. The accounting policies of the reportable segments are the same as the Group's accounting policies described throughout the notes when relevant. The following notes are presented in this section: • 2.1 Segment information Reportable segments • 2.2 Exceptional items Operating segments are reported in a manner consistent with the internal reporting provided to the • 2.3 Revenues Executive Board, which is the chief operating decision maker. The division structure is primarily based on • 2.4 Other operating income geographical markets. Business activities that cannot be allocated to any other segment are reported • 2.5 Personnel expenses under 'Global functions, corporate activities and others'. These include primarily the head office costs, • 2.6 Other operating expenses the Global IT costs and expenses related to other interests. • 2.7 Result of joint ventures and associates • 2.8 Translation and operational currency risk Vopak's five divisions are Americas, Asia & Middle East, China & North Asia, Europe & Africa and LNG. • 2.9 Cash flows from operating activities (gross) The EBITDA and Group operating profit of the divisions include the net effects of the company-wide cost allocations. Costs that cannot be allocated to the divisions are part of the ‘Global functions, corporate activities and others’. The actual allocated costs can differ per reporting period.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 141
Statement of income
Global functions of which Asia & of which China & of which and corporate Americas United States Middle East Singapore North Asia Europe & Africa Netherlands LNG activities Total
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Revenues1 322.9 313.7 184.6 194.5 289.3 305.0 224.3 234.0 42.0 38.9 532.9 590.3 412.3 424.4 n/a n/a 2.9 4.7 1,190.0 1,252.6 Other operating income 2.1 0.5 0.6 0.1 14.7 19.3 2.0 9.8 4.0 3.8 2.0 5.8 1. 8 3.6 4.2 3.8 – 0.2 27.0 33.4 Operating expenses - 147.9 - 156.4 - 84.8 - 92.4 - 97.6 - 97.3 - 64.6 - 66.2 - 22.4 - 21.7 - 263.1 - 298.3 - 198.5 - 206.3 - 9.5 - 9.3 - 51.0 - 49.7 - 591.5 - 632.7 Result joint ventures and associates 11. 3 7. 4 0.8 0.2 70.2 82.1 0.7 0.7 33.3 41.4 3.3 2.1 0.8 0.7 47.9 43.6 – - 0.1 166.0 176.5 EBITDA 188.4 165.2 101.2 102.4 276.6 309.1 162.4 178.3 56.9 62.4 275.1 299.9 216.4 222.4 42.6 38.1 - 48.1 - 44.9 791.5 829.8 Depreciation and amortization - 62.4 - 56.7 - 33.3 - 32.0 - 63.5 - 63.3 - 46.3 - 47.1 - 11.5 - 11.6 - 145.2 - 143.3 - 109.3 - 103.8 – – - 16.9 - 15.8 - 299.5 - 290.7 Total EBIT excluding exceptional items 126.0 108.5 67.9 70.4 213.1 245.8 116.1 131.2 45.4 50.8 129.9 156.6 107.1 118.6 42.6 38.1 - 65.0 - 60.7 492.0 539.1
Exceptional items - 33.4 - 16.8 – - 14.8 33.0 24.6 - 1.7 218.3 – – 0 - 2.6 - 2.1 208.7 Total EBIT including exceptional items 92.6 91.7 213.1 231.0 78.4 75.4 128.2 374.9 42.6 38.1 -65.0 -63.3 489.9 747.8
Reconciliation consolidated net profit2 Net finance costs - 86.3 - 85.7 Profit before income tax 403.6 662.1 Income tax - 73.1 - 58.3 Net profit 330.5 603.8 Non-controlling interests 29.6 32.8 Net profit holders of ordinary shares 300.9 571.0 Occupancy rate subsidiaries 92% 91% 87% 81% 80% 75% 88% 83% 88% 84%
1 The Group has one single global customer who contributed both years presented just above 10% of the consolidated revenues. All divisions provided services to this single global customer. 2 As the Group neither allocates interest expenses to segments, nor accounts for taxes in them, there is no segmented disclosure of the net profit.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 142
Statement of financial position at 31 December
Global functions of which Asia & of which China & of which and corporate Americas United States Middle East Singapore North Asia Europe & Africa Netherlands LNG activities Total
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Assets of subsidiaries 1,051.5 1,066.7 442.6 404.3 1,258.0 1,282.0 825.3 883.1 198.1 220.9 2,427.0 2,265.4 1,686.9 1,477.0 1. 2 1. 2 262.7 264.5 5,198.5 5,100.7 Joint ventures and associates 256.2 140.0 174.1 49.7 369.6 472.4 1. 1 1. 2 297.2 287.1 19.5 19.1 1. 5 1. 6 376.9 354.7 – - 0.5 1,319.4 1,272.8 Total assets 1,307.7 1,206.7 616.7 454.0 1,627.6 1,754.4 826.4 884.3 495.3 508.0 2,446.5 2,284.5 1,688.4 1,478.6 378.1 355.9 262.7 264.0 6,517.9 6,373.5 Total liabilities 225.8 252.3 121.9 126.4 624.6 616.5 482.7 487.7 41.4 36.1 544.4 412.8 397.7 258.3 4.1 1.8 1,952.0 1,858.9 3,392.3 3,178.4
Investments1
Global functions of which Asia & of which China & of which and corporate Americas United States Middle East Singapore North Asia Europe & Africa Netherlands LNG activities Total
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Intangible assets 4.9 1. 3 1. 5 0.5 5.6 0.7 4.6 0.6 0.1 0.2 7. 0 2.6 4.3 1. 7 – – 20.7 24.7 38.3 29.5 Property, plant and equipment2 189.1 167.9 99.9 39.2 75.5 91.2 40.7 66.3 12.1 21.9 340.2 343.1 184.3 194.9 – – 2.5 2.9 619.4 627.0 Joint ventures and associates 32.0 32.2 27.5 2.1 0.1 3.8 – – 22.4 6.5 – – – – 13.5 4.8 0.5 – 68.5 47.3 Other non-current assets 0.2 0.2 – – 0.3 0.2 0.2 0.2 – – – – – – – – – – 0.5 0.4 Total 226.2 201.6 128.9 41.8 81.5 95.9 45.5 67.1 34.6 28.6 347.2 345.7 188.6 196.6 13.5 4.8 23.7 27.6 726.7 704.2
1 Excluding loans granted, finance lease receivables and acquisition of subsidiaries, joint ventures and associates. 2 Relates only to Property, plant and equipment - owned assets.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 143
Note 2.2 Exceptional items 2020 2019 Excluding Excluding Group policy Exceptional exceptional exceptional In EUR millions IFRS figures items items items The items in the statement of income include items that are exceptional by nature from a management perspective based on their size and/or nature. For the definition of exceptional items applied by the Revenues 1,190.0 – 1,190.0 1,252.6 company, reference is made to the Glossary. The material exceptional items are disclosed separately in Other operating income 60.0 33.0 27.0 33.4 the notes when relevant in order to increase transparency. Total operating income 1,250.0 33.0 1,217.0 1,286.0 Personnel expenses - 331.2 0.7 - 331.9 - 346.0 Exceptional items Impairment - 30.1 - 30.1 – – Other operating expenses - 260.5 - 0.9 - 259.6 - 286.7 In EUR millions Note 2020 2019 Result joint ventures and associates 161.2 - 4.8 166.0 176.5 Gains on assets held for sale/divestments 2.4 33.0 243.1 Group operating profit before depreciation and amortization (EBITDA) 789.4 - 2.1 791.5 829.8 Loss on assets held for sale/divestments 2.6 - 1.7 – Depreciation and amortization - 299.5 – - 299.5 - 290.7 Impairment 3.8 - 42.9 - 17.2 Group operating profit (EBIT) 489.9 - 2.1 492.0 539.1 Reversal impairment 3.8 12.8 – Interest and dividend income 5.9 – 5.9 8.8 Personnel expenses 2.5 0.7 - 1.0 Finance costs - 92.2 – - 92.2 - 96.3 Other operating expenses 2.6 0.8 - 1.5 Net finance costs - 86.3 – - 86.3 - 87.5 Operating profit 2.7 223.4 Profit before income tax 403.6 - 2.1 405.7 451.6 Result joint ventures and associates 2.7 - 4.8 - 14.7 Income tax - 73.1 - 2.8 - 70.3 - 61.0 Group operating profit - 2.1 208.7 Net profit 330.5 - 4.9 335.4 390.6 Finance costs 5.6 – 1. 8 Profit before income tax - 2.1 210.5 Attributable to: Tax on above-mentioned items 8.1 - 2.8 2.7 Holders of ordinary shares 300.9 - 4.9 305.8 357.8 Total effect on net profit - 4.9 213.2 Non-controlling interests 29.6 – 29.6 32.8 Net profit 330.5 - 4.9 335.4 390.6
For more information on the individual exceptional items, including their amount and nature, reference Basic earnings per ordinary share (in EUR) 2.38 2.42 2.80 is made to the corresponding notes. A reconciliation between the income statement based on IFRS Diluted earnings per ordinary share (in EUR) 2.38 2.41 2.80 and the income statement excluding exceptional items, is presented in the next table.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 144
Note 2.3 Revenues Storage fees are mostly invoiced upfront in the month preceding the month to which the storage fees The Group operates bulk liquids and gas storage terminals in key strategic ports. The Group owns and relate. Handling and other services are generally invoiced afterwards, based on the actual operates specialized facilities including tanks, jetties, truck loading stations and pipelines. In many usage. Invoices are generally paid by customers at relatively short notice in agreement with the payment instances, the Group stores the customers´ products for extended periods at the terminals, often under terms of the contracts. strict specified conditions such as controlled temperatures. The Group also blends components according to customer specifications. Within the revenue related to storage and handling services, the following categorization is made: • Storage services: relates to revenues from renting of storage capacity The Group ensures safe, clean and efficient storage and handling of bulk liquid products and gases for its • Product movements: revenues related to product movements customers. By doing so, the Group enables the delivery of vital products, ranging from chemicals, oil, • Storage and handling related services: relates to revenues for storage and handling related gases and LNG to biofuels and vegoils. services, such as blending, homogenization, temperature control. • Other services: primarily relates to the agency services that vopak provides to customers via Vopak Accounting policies Agencies. Revenue from contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Group expects to The Group does not make any significant judgments with regards to revenue recognition, among others be entitled in exchange for those services or goods. Revenues excludes amounts collected on behalf of due to the nature of the business. third parties and are net of discounts and value added taxes. Monthly storage rates and prices for other services are contractually agreed before the services are rendered and do not contain material variable Revenues components. When it is probable that the future economic benefits will flow to the Group, the The table below provides an overview of the revenue per type of service that the Group provides recognition in the statement of income is in proportion to the stage of the rendered performance as at to its customers. the end of the reporting period. In EUR millions 2020 2019 The Group has a right to a consideration from a customer in an amount that corresponds directly with Storage services 960.2 980.1 the value to the customer of the entity's services completed to date. Tank storage rentals, including Product movements 98.2 107.9 minimum guaranteed throughputs, are recognized on a straight-line basis over the contractual period Storage and handling related services 74.1 110.6 during which the services are rendered. Revenues from excess throughputs, heating/cooling, Other services 57.5 54.0 homogenization, product movements and other services are recognized when these services are Revenues 1,190.0 1,252.6 rendered. Customers simultaneously consume and benefit from the services at the moment that these are rendered, resulting in a situation where revenue is recognized over time. Modifications of property, The table below provides an overview of the revenues per product type per reportable segment plant and equipment upfront paid by customers are accounted for as prepaid revenues and recognized in (product-market combinations). the statement of income over the contractual period on a straight-line basis.
Americas Asia & Middle East China & North Asia Europe & Africa Other Total
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Chemical products 150.5 165.5 123.3 141.3 40.4 38.0 186.3 182.5 – – 500.5 527.3 Oil products 123.7 99.4 141.8 136.2 1. 4 0.5 238.0 296.2 – – 504.9 532.3 Vegoils and biofuels 36.6 32.6 2.0 3.2 – – 59.2 61.5 – – 97.8 97.3 Gas products – – 9.5 9.5 0.2 0.3 32.9 32.1 – – 42.6 41.9 Others 12.1 16.2 12.7 14.8 – 0.1 16.5 18.0 2.9 4.7 44.2 53.8 Revenues 322.9 313.7 289.3 305.0 42.0 38.9 532.9 590.3 2.9 4.7 1,190.0 1,252.6
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 145
The table below provides an overview of the assets and liabilities recognized in relation to contracts with customers and their movements during the periods presented.
2020 2019
Trade Provision for Deferred Trade Provision for Deferred In EUR millions receivables impairment revenues Total receivables impairment revenues Total Balance at 1 January 115.1 - 0.4 - 16.6 98.1 101.9 - 0.8 - 21.8 79.3 Recognized as revenue in current period 1,173.4 – 16.6 1,190.0 1,230.8 – 21.8 1,252.6 Payments - 1,179.7 – - 18.6 - 1,198.3 - 1,218.8 0.2 - 16.6 - 1,235.2 Impairments – - 2.1 – - 2.1 – - 0.1 – - 0.1 Receivables written off during the year as uncollectible – – – – - 0.2 0.3 – 0.1 Exchange differences - 4.9 0.1 – - 4.8 1. 4 – – 1. 4 Balance at 31 December 103.9 - 2.4 - 18.6 82.9 115.1 - 0.4 - 16.6 98.1
Note 2.4 Other operating income 2020 In the second and third quarter of 2020, Vopak received the remaining consideration of EUR 33.0 million Accounting policies relating to the December 2019 divestment of its 49% equity share in the joint venture Gains on the sale of assets and the divestment of interests in other entities are deemed realized at the Vopak SDIC Yangpu Terminal in Hainan, China. This receipt resulted in the recognition of an exceptional time the benefits and the risks of the assets are entirely borne by the buyer and there is no uncertainty gain for the same amount in 2020. as to whether the agreed payment will be received. Gains on the sale of subsidiaries, joint ventures and associates are realized at the time control respectively joint-control or significant influence is no There were no other individually material items recognized in Other operating income in 2020. longer exercised. 2019 Dividend income is recognized when the right to receive payment is established. All dividend income is In 2019 an amount of EUR 243.1 milion was recognized as Other operating income in relation related to dividends from equity investments held at Fair value through Other comprehensive to divested terminals and a step-acquisition. For more information reference is made to income (FVOCI). Reference is also made to note 9.6. note 3.1 and note 3.5.
Other operating income There were no other individually material items recognized in Other operating income in 2019.
In EUR millions 2020 2019 Management fee joint ventures and associates 9.4 8.6 Gains on sale of property, plant and equipment 0.1 1. 1 Gains on divestments 33.0 243.1 Dividends received from other financial assets 2.2 – Other 15.3 23.7 Total 60.0 276.5
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 146
Note 2.5 Personnel expenses 2020 During 2020, several of our legal entities in China and Singapore received in total EUR 4.0 million of Accounting policies COVID-19 related incentives in connection with job support or other employee related matters. These Short-term employee benefits: wages, salaries, social security contributions, annual leave and sickness were general incentive schemes that were automatically provided to all legal entities in these countries absenteeism, incentives and non-monetary benefits are recognized in the year in which the related which met the requirements. There were no Vopak subsidaries which actively applied for COVID-19 services are rendered by employees. support measures.
Termination benefits are payable when employment is terminated by the Group before the normal An exceptional gain was recognized for the amount of EUR 0.7 million relating to the reversal of a retirement date, or whenever an employee accepts voluntary redundancy in exchange for these provision for reorganization at our terminal in Quebec City in Canada, as the prior year uncertainty with benefits. The Group recognizes termination benefits at the earlier of the following dates: (a) when the respect to renewal of an expiring land lease contract was resolved during 2020. Group can no longer withdraw the offer of those benefits; and (b) when the Group recognizes a restructuring provision that involves the payment of termination benefits. 2019 In 2019, expenses of EUR 3.2 million were recognized in connection with organizational alignments at The Group recognizes a provision for incentive plans where contractually obliged or where there is a various locations within the Group. An exceptional item of EUR 0.7 million was recognized for our past practice that has created a constructive obligation. terminal in Quebec City in Canada as a result of uncertainty with respect to renewal of an expiring land lease contract. For more information, reference is made to note 3.8 and 9.5. For the accounting policies related to share-based compensation, other types of remuneration and pensions and other employee benefits reference is made to the notes 7. 2 and 9.4. An exceptional item of EUR 0.2 million was recorded relating to the divestment of the Estonian terminal Vopak E.O.S. For more information, reference is made to note 3.5. Capitalized personnel expenses: costs of employee benefits arising directly from the construction of Intangible assets or Property, plant and equipment and which meet the recognition criteria, are Average number of employees (in FTEs) capitalized as part of the cost of the asset concerned. During the year under review, the Group employed on average 4,355 employees and temporary staff (in FTEs) (2019:4,345). The movements in the number of own employees at subsidiaries (in FTEs) Personnel expenses were as follows:
In EUR millions Note 2020 2019 In FTEs 2020 2019 Wages and salaries 302.2 307.3 Number at 1 January 3,722 3,663 Social security charges 35.4 37.7 Joiners 450 668 Contribution to pension schemes (defined contribution) 32.6 30.8 Leavers - 407 - 447 Pension charges (defined benefit plans) 9.4 6.7 6.3 Acquisition – 47 Long-term incentive plans 7. 2 4.9 8.6 Divestment/deconsolidation - 52 - 209 Early retirement 3.8 3.2 Number at 31 December 3,713 3,722 Other personnel expenses 19.9 25.1 Capitalized personnel expenses - 74.3 - 72.0 Total 331.2 347.0
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 147
Note 2.6 Other operating expenses In the Europe & Africa division, settlement of a legal dispute relating to historical positions of several long-term contracts with one of our suppliers resulted in a release of accruals for the amount Accounting policies of EUR 7.4 million. In addition, an increase in indirect taxes raised by local authorities relating to multiple Operating expenses are recognized in the income statement when incurred. They are caused by a years, led to a one-off increase in the Operating expenses of EUR 4.3 million in the decrease in future economic benefits related to a decrease of an asset or an increase of a liability that Europe & Africa division. has arisen and can be measured reliably. 2019 Losses on the sale of assets are presented under Other operating expenses and are recognized as soon In 2019, an exceptional item of EUR 1.4 million was recognized in relation to an environmental provision as they are foreseen. Costs relating to the identification and selection phases of business development for our terminal in Quebec City in Canada as a result of uncertainty with respect to renewal of the land projects are recognized in the statement of income in the year in which the costs are incurred. lease contract. For more information, reference is made to note 3.8 and 9.5. Furthermore, an amount of EUR 2.0 million was recognized in relation to environmental provisions at the Europe & Africa division. Other operating expenses For more information, reference is made to note 9.5.
In EUR millions 2020 2019 An exceptional item of EUR 0.1 million was recorded relating to the divestment of the Estonian terminal Maintenance 52.9 61.0 Vopak E.O.S. For more information, reference is made to note 3.5. Energy and utilities 32.7 41.0 Environmental, safety and cleaning 28.5 35.9 Note 2.7 Result of joint ventures and associates Advisory fees 29.2 20.3 Insurance 1 7. 9 16.3 Accounting policies Rents and rates 23.3 21.6 Joint ventures and associates are accounted for using the equity method. For the accounting policies Third party logistics 8.4 11. 6 relating to joint ventures and associates, reference is made to note 3.5. IT 27.8 21.3 Lease expenses - variable expenses, short and low value leases 0.6 11. 0 Result of joint ventures and associates Other 39.2 48.2 In EUR millions Note 2020 2019 Total 260.5 288.2 Result of joint ventures and associates (including exceptional items) 3.5 161.2 161.8 Total 161.2 161.8 2020 On 31 January 2020, Vopak completed the earlier announced divestment of its 100% shareholding in the terminal in Algeciras, Spain, generating a cash inflow of EUR 135 million. The recognized exceptional loss Joint ventures are an important part of the Group. Summarized financial information of our joint ventures before taxation was EUR 1.7 million and was recognized under the Other operating expenses. This and associates on an IFRS basis is presented in note 3.5. completed the divestment program of the terminals in Algeciras, Amsterdam and Hamburg with a total exceptional gain of EUR 200 million recognized in the periods 2019 and Q1 2020. In addition, the effects of unaudited non-IFRS proportional consolidation on the statement of financial position and statement of income of the Group are presented under ‘Additional information’ In December 2020, an exceptional gain of EUR 0.8 million was recognized in relation to the partial accompanying this report. reversal of an environmental provision for our terminal in Quebec City in Canada as a result of the uncertainty with respect to renewal of the land lease contract thas was resolved during the year. In 2020, other operating expenses were recognized as exceptional items for the total amount of EUR 4.8 million in connection with the acquisition of the three industrial joint venture terminals from Dow on the U.S. Gulf Coast. For more information, reference is made to note 3.5.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 148
Note 2.8 Translation and operational currency risk Note 2.9 Cash flows from operating activities (gross) The Group is exposed to a low level of currency risk on the transaction level, since operating income and operating expenses are, as a rule, largely denominated in the same currency. However, in some In EUR millions Note 2020 2019 countries (in particular, in Latin America and Asia), a substantial portion of the income flow is in US Net profit 330.5 603.8 dollars, whereas the operating expenses are largely denominated in local currencies. In these countries, Adjustments for: the aim is to hedge the transaction risk naturally. Any material net transaction position can be hedged in - Depreciation and amortization 3.7 299.5 290.7 full by means of forward exchange contracts or other derivatives. - Impairment 3.8 30.1 1 7. 2 - Net finance costs 5.6 86.3 85.7 The Group is, however, exposed to risk in connection with the translation of income statements and net - Income tax 8.1 73.1 58.3 assets of foreign entities into euros, since a significant portion of the Group's results is generated in - Movements in other non-current assets - 4.8 - 4.9 foreign entities. - Movements in other long-term liabilities - 8.1 - 0.1 - Movements in provisions excluding deferred taxes - 8.1 1. 3 Sensitivity to exchange rates arising from the translation of the results of - Result joint ventures and associates 2.7 - 161.2 - 161.8 foreign currency operations - Measurement of equity-settled share-based payment arrangements 5.3 - 1.3 8.6 The translation risk of converting the net result of foreign entities into euros mainly concerns the - Result on sale of assets held for sale excluding transaction expenses 3.1 - 31.3 - 240.9 Singapore dollar and the US dollar. The sensitivity to these currencies, based on a reasonable change in Total adjustments 274.2 54.1 the exchange rate at the reporting date, is as follows: Realized value adjustments of derivative financial instruments 58.9 5.8 Movements in other current assets (excluding cash and cash equivalents) - 15.5 - 56.0 A 10 dollar cent change in the EUR/USD exchange rate approximately affects Vopak’s figures as follows Movements in other current liabilities (excluding bank overdrafts (based on figures for 2020, excluding exceptional items): and dividends) 49.0 8.2 • Revenues would differ by EUR 22.7 million (2019: EUR 22.8 million) Dividends received from joint ventures and associates 3.5 134.2 91.2 • Group operating profit before depreciation and amortization (EBITDA) would differ by EUR 17.2 million Effect of changes in exchange rates on other current assets and liabilities - 9.1 2.6 (2019: EUR 17.6 million) Cash flows from operating activities (gross) 822.2 709.7 • Group operating profit (EBIT) would differ by EUR 12.8 million (2019: EUR 13.4 million) • Net profit would differ by EUR 10.1 million (2019: EUR 11.6 million).
A 10 dollar cent change in the EUR/SGD exchange rate approximately affects Vopak’s figures as follows (based on figures for 2020 excluding exceptional items): • Revenues would differ by EUR 14.3 million (2019: EUR 15.4 million) • Group operating profit before depreciation and amortization (EBITDA) would differ by EUR 11.0 million (2019: EUR 12.0 million) • Group operating profit (EBIT) would differ by EUR 8.0 million (2019: EUR 8.9 million) • Net profit would differ by EUR 4.2 million (2019: EUR 4.6 million).
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 149
Section 3 Strategic investments and divestments If parts of the consideration are conditional upon future events (contingent consideration) or satisfaction of agreed terms, these parts are recognized at fair value at the acquisition date. Transaction costs that This section presents details on the core operating assets that form the basis for the activities of the the Group incurs in connection with the business combination are expensed as incurred under Other Vopak Group, including the main developments with regard to these assets during the financial operating expenses. years presented. Divestments The following notes are presented in this section: Gains or losses on the divestments or winding-up of subsidiaries, joint ventures or associates are • 3.1 Acquisition and divestment of subsidiaries measured as the difference between the consideration received adjusted for directly related divestment • 3.2 Intangible assets or winding-up costs and the carrying amount of the net assets at the time of disposal or winding-up • 3.3 Property, plant and equipment - owned assets including any carrying amount of allocated goodwill. • 3.4 Leases • 3.5 Joint ventures and associates Acquisitions and divestments • 3.6 Assets held for sale The table below provides an overview of the results realized as either part of the Other operating income • 3.7 Depreciation and amortization or Other operating expenses on all (step-)acquisitions and divestments completed during the years • 3.8 Impairment tests and impairments presented, including joint ventures and associates. Reference is also made to note 2.4.
Note 3.1 Acquisition and divestment of subsidiaries In EUR millions 2020 2019 Result from step-acquisition Vopak Terminal Ningbo – 1. 1 Accounting policies Sale joint venture Vopak E.O.S. – 16.7 Business combinations Sale of subsidiaries Amsterdam and Hamburg Terminals – 201.8 Acquired businesses are recognized in the Consolidated financial statements from the acquisition date, Sale of subsidiary Algeciras - 1.7 – which is the date when the Group effectively obtains control of the acquired business. Businesses that Sale joint venture SDIC Yangpu Terminal 33.0 23.5 are divested or wound up are recognized in the Consolidated financial statements until the date of Total 31.3 243.1 divestment or winding-up. Comparative figures are not restated for businesses acquired, divested or wound up. For more information on the cash proceeds, reference is made to the Consolidated Statement of Cash Flows. When the Group obtains control of a business, the acquisition method is applied. The identifiable assets, liabilities and contingent liabilities are measured at fair value at the acquisition date. Identifiable The results realized on the (step-)acquisition and divestments of subsidiaries are disclosed in the intangible assets are recognized if separable or if they arise from contractual or other legal rights. paragraph below. For an overview of the acquisitions and divestments of joint ventures and associates, Deferred tax related to fair value adjustments is also recognized. reference is made to note 2.6 and note 3.5.
Any excess of the fair value of the consideration transferred, the recognized amount of any non- controlling interests and the fair value of any existing equity interest in the acquired entity over the fair value of identifiable assets, liabilities and contingent liabilities, is recognized as goodwill. When the excess is negative, a bargain purchase gain is recognized in the statement of income at the acquisition date.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 150
Acquisitions of subsidiaries Contingent consideration recognized in relation to divestment of Vopak Terminal Amsterdam and 2020 Vopak Terminal Hamburg: There were no acquisitions of subsidiaries in 2020. In December 2019, an additional exceptional gain of EUR 8.0 million was recognized in relation to the divestment of the terminals in Amsterdam and Hamburg. The divestment transaction of these terminals 2019 contained a contingent consideration related to successfully completing the divestment of Step-acquisition of Vopak Terminal Ningbo: Vopak Terminal Algeciras. The divestment of all three terminals was negotiated as one package deal. At The Group acquired an additional 35% equity share in the joint venture Vopak Terminal Ningbo (China) on year-end 2019, management determined that it was virtually certain, that Vopak Terminal Algeciras would 25 January 2019, bringing the total share in equity to 85% and obtaining control. The total consideration be divested, and that the contingent consideration would be received. paid (excluding cash acquired) amounted to EUR 4.5 million. The step-acquisition resulted in a minor exceptional gain of EUR 1.1 million. The acquisiton had no material effects on the financial This gain was also classified as an exceptional item, and brought the total exceptional gain recognized in statement in 2019. 2019 in relation to the divestment of the terminals in Amsterdam and Hamburg to EUR 201.8 million. For more information, reference is made to note 2.4. Acquisition of 20% minority share for Vopak Terminal Algeciras: On 9 October 2019, an update was provided related to the earlier announced divestment of Note 3.2 Intangible assets Vopak Terminal Algeciras in Spain.This transaction was linked to the divestment of the terminals in Amsterdam and Hamburg. It was announced that Vopak concluded the discussions with the minority Accounting policies shareholder in Vopak Terminal Algeciras and had acquired the remaining 20% of the shares held by the Intangible assets include goodwill, internally developed software, contractual relationships, concessions minority shareholder. Vopak had an agreement with First State Investments for the sale of 100% of the and favorable leases ensuing from business combinations. Goodwill represents the difference between shares in Vopak Terminal Algeciras. On 31 January 2020, the Group completed the divestment of Vopak the purchase price and Vopak’s share in the fair value of the acquired identifiable assets, liabilities and Terminal Algeciras (see the pargraph below for further details). contingent liabilities of the company acquired at the time Vopak obtains control (acquisition method). Goodwill is carried at cost less accumulated impairments. Divestments of subsidiaries 2020 For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the On 31 January 2020, Vopak completed the earlier announced divestment of its 100% shareholding in the operating segments (divisions), which represents the lowest level within the Vopak Group at which the terminal in Algeciras, Spain, generating a cash inflow of EUR 135 million. The recognized exceptional loss goodwill is monitored for internal management purposes. before taxation was EUR 1.7 million. This completed the divestment program of the terminals in Algeciras, Amsterdam and Hamburg with a total exceptional gain of EUR 200 million recognized in the Goodwill relating to an associate or joint venture is included in the carrying amount of the investment in periods 2019 and Q1 2020. the associate or joint venture and is not tested for impairment separately, but is part of the impairment testing of the investment in the associate or joint venture. 2019 Divestment of Vopak Terminal Amsterdam and Vopak Terminal Hamburg: Software is carried at historical cost, net of straight-line amortization based on its expected useful life On 30 September 2019, Vopak completed the earlier announced divestment of its terminals in and any potential impairment. Amsterdam and Hamburg. The total recognized exceptional gain before taxation was EUR 193.8 million. Total cash consideration received for the Group's investment in the equity of these terminals amounted Other intangible assets are carried at their initial fair value at the time of the acquisition, net of to EUR 378.2 million. At the same time additionally the intercompany loans that were provided by the straight-line amortization and impairments. Group were repaid by these entities for the amount of EUR 178.6 million. The amount of cash and cash equivalents held by the terminals upon divestment amounted to EUR 35.5 million. Other items are mainly licenses that are carried at historical cost, net of straight-line amortization.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 151
Movements in intangible assets Note 3.3 Property, plant and equipment - owned assets
Under Accounting policies Good- Soft- devel- In EUR millions Note will ware Other opment Total Property, plant and equipment mainly relate to the owned terminals assets of the company which are Purchase price of operating assets 39.7 146.5 60.3 14.2 260.7 used to service the customers in the various countries where the Group operates. Property, plant and Accumulated amortization and impairment – - 94.1 - 10.7 – - 104.8 equipment are broken down into their components and carried at historical cost, net of accumulated straight-line depreciation and less any impairment losses. Interest during construction is capitalized (see Carrying amount at 31 December 2018 39.7 52.4 49.6 14.2 155.9 also note 5.6). Historical cost includes the initial acquisition cost plus other direct acquisition costs (such Movements: as unrecoverable taxes or transport) and construction costs that can be allocated directly (such as hours Acquisitions – – 0.5 – 0.5 of own employees and advisory fees). To the extent that dismantling obligations exist at the end of the Additions – 0.9 – 28.6 29.5 useful life, these estimated costs and any amendments thereto are included in the cost of the assets. Disposal 3.6 – - 0.1 – – - 0.1 Reclassification to held-for-sale/divestments – - 1.7 - 5.4 - 0.6 - 7.7 Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as Reclassification – 1 7. 1 – - 14.6 2.5 appropriate, only when it is probable that future economic benefits associated with the item will flow to Amortization 3.7 – - 14.1 - 1.3 – - 15.4 the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is Impairment 3.8 – - 2.5 - 0.8 – - 3.3 derecognized. Costs of repairs and maintenance that do not increase the future economic benefits and Exchange differences 1. 7 0.2 0.9 0.1 2.9 are part of the day-to-day servicing of the assets are recognized as expenses. Carrying amount at 31 December 2019 41.4 52.2 43.5 27.7 164.8
Purchase price of operating assets 41.4 142.2 55.2 27.7 266.5 Accumulated amortization and impairment – - 90.0 - 11.7 – - 101.7 Carrying amount at 31 December 2019 41.4 52.2 43.5 27.7 164.8 Movements: Additions – 3.0 – 35.3 38.3 Reclassification – 24.2 – - 21.4 2.8 Amortization 3.7 – - 16.5 - 1.1 – - 17.6 Impairment 3.8 – - 0.2 - 8.6 – - 8.8 Exchange differences - 2.9 - 0.1 - 3.1 - 0.2 - 6.3 Carrying amount at 31 December 2020 38.5 62.6 30.7 41.4 173.2
Purchase price of operating assets 38.5 160.5 50.5 41.4 290.9 Accumulated amortization and impairment – - 97.9 - 19.8 – - 117.7 Carrying amount at 31 December 2020 38.5 62.6 30.7 41.4 173.2
The increase in intangible assets in both years presented, is primarily related to internally developed IT projects. For more information on the impairment recognized in 2020 and 2019, reference is made to note 3.8.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 152
Movements in property, plant and equipment - owned assets
Tank storage Machinery and Under In EUR millions Note Land Buildings terminals equipment development Total Purchase price of operating assets 43.0 309.7 5,578.0 163.3 561.6 6,655.6 Accumulated depreciation and impairment – - 150.9 - 2,659.1 - 109.3 – - 2,919.3 Carrying amount at 31 December 2018 43.0 158.8 2,918.9 54.0 561.6 3,736.3 Reclass from owned to leased assets due to IFRS 16 – – - 15.7 - 0.4 - 5.4 - 21.5 Carrying amount at 1 January 2019 43.0 158.8 2,903.2 53.6 556.2 3,714.8 Movements: Acquisitions – 0.6 4.4 1. 8 – 6.8 Additions – 7. 6 44.2 3.3 571.9 627.0 Disposals – - 3.9 6.4 - 4.6 - 1.5 - 3.6 Reclassification to assets held for sale/divestments 3.6 – - 25.9 - 434.0 - 9.3 - 21.7 - 490.9 Reclassification – 11. 6 418.5 4.7 - 437.3 - 2.5 Depreciation 3.7 – - 12.1 - 219.4 - 10.6 – - 242.1 Impairment 3.8 – - 0.2 - 13.2 - 0.5 – - 13.9 Exchange differences 1. 4 1. 5 32.4 0.7 9.2 45.2 Carrying amount at 31 December 2019 44.4 138.0 2,742.5 39.1 676.8 3,640.8
Purchase price of operating assets 44.4 285.7 5,404.3 134.2 676.8 6,545.4 Accumulated depreciation and impairment – - 147.7 - 2,661.8 - 95.1 – - 2,904.6 Carrying amount at 31 December 2019 44.4 138.0 2,742.5 39.1 676.8 3,640.8 Movements: Additions – 4.9 78.1 3.2 533.2 619.4 Disposals – - 0.2 - 0.6 - 0.9 - 1.5 - 3.2 Reclassification – 39.9 407.6 7. 3 - 457.6 - 2.8 Depreciation 3.7 – - 15.0 - 225.6 - 4.1 – - 244.7 Impairment 3.8 – - 1.2 - 20.5 0.4 – - 21.3 Exchange differences - 5.2 - 5.7 - 135.3 - 1.5 - 41.6 - 189.3 Carrying amount at 31 December 2020 39.2 160.7 2,846.2 43.5 709.3 3,798.9
Purchase price of operating assets 39.2 315.7 5,638.1 132.3 709.3 6,834.6 Accumulated depreciation and impairment – - 155.0 - 2,791.9 - 88.8 – - 3,035.7 Carrying amount at 31 December 2020 39.2 160.7 2,846.2 43.5 709.3 3,798.9
For an overview of the investment commitments of the Group in relation to property, plant and equipment reference is made to note 9.7.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 153
Note 3.4 Leases Lease expenses Lease payments are allocated between a principal and interest expense. The interest expense is charged Accounting policies to profit or loss over the lease period to produce a constant periodic rate of interest on the remaining In line with the nature of its activities, the Group has a large portfolio of long-term land leases and leases balance of the liability for each period. Right-of-use assets are depreciated over the shorter of the asset's of other non-current assets such as jetties, offices and other equipment. Most of the contracts contain useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a extension options. purchase option, the right-of-use asset is depreciated over the underlying asset’s useful life.
Contracts typically contain both lease and non-lease components. The Group allocates the consideration Short-term and low-value leases in the contract to the lease and non-lease components based on their relative stand-alone prices. The Payments associated with short-term leases and all leases of low-value assets are recognized on a non-lease components are normally relatively small. straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets primarily comprise IT and communication equipment and small Lease terms are negotiated on an individual basis and contain a wide range of different terms and items of office furniture. Short-term leases may also relate to long-term (land) leases for which the conditions. The lease agreements in general do not impose any covenants other than the security original maximum contract term has expired and a new contract is currently under negotiation. interests in the leased assets that are held by the lessor. Leased assets cannot be used as security for borrowing purposes by the Group. The risks associated with leases The group is exposed to the risk of potential future increases in the periodic lease payments based on Determining the right-of-use asset and the lease liability an index or rate, which are not included in the lease liability until they take effect. When such Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities adjustments to lease payments occur, the lease liability is reassessed and adjusted against the include the net present value of the following lease payments: right-of-use asset. • fixed payments (including in-substance fixed payments), less any lease incentives receivable • variable lease payment that are based on an index or a rate, initially measured using the index or rate Furthermore, the Group also runs the risks that critical lease contracts such as lease contracts expire and as at the commencement date cannot be renewed. In such instances the Group has to decommission the terminal by either handing • amounts expected to be payable by the group under residual value guarantees (normally not present) over the site together with the assets to the lessor, or by demolishing the assets, cleaning up the site • the exercise price of a purchase option if the group is reasonably certain to exercise that option, and and handing over the site to the lessor. In most instances the Group is able to enter into a new lease • payments of penalties for terminating the lease, if the lease term reflects the group exercising contract, yet frequently at higher rates. that option. Initial application of IFRS 16 as per 1 January 2019 When it is reasonably certain that a lease extension option will be exercised, lease payments that are to Until 2019, leases of property, plant and equipment were classified as either finance leases or operating be made under these extension options are also included in the measurement of the liability. leases. Due to the application of IFRS 16 as per 1 January 2019, leases were recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Determining the discount rate Various movement schedules in these consolidated financial statements still disclose the initial effect of The lease payments are in allmost all instances discounted using the incremental borrowing rate of the Vopak applying IFRS 16 as per 1 January 2019 where relevant. entity entering into the lease. This is because the interest rate implicit in the lease can in most instances not be readily determined. The incremental borrowing rate is the rate that the individual entity would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset, in a similar economic environment with similar terms, security and conditions.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 154
Key accounting estimates and judgments Determining the term of a lease contract Extension and termination options are included in most lease contracts held by the Group. These options are used to maximize operational flexibility in terms of managing the assets used in the Group’s operations. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. This is explicitly the case for the land lease contracts.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or to not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
For leases of land, sea and jetties the following factors are normally the most relevant: • Remaining useful lives of the tank terminal assets which depend on the lease term of the lease contract • Remaining duration of long-term customer contracts • The amount of the penalties to terminate (or not extend) • Other factors, including historical lease durations and the costs and business disruption that is expected to be incurred to replace the leased asset.
For most of the land lease contracts it was assessed by management that it was reasonably certain that the extension options will be exercised. The lease term is reassessed if an option is actually exercised (or not exercised) or the group becomes obliged to exercise (or not exercise) it. The assessment of reasonable certainty is only revised if a significant event or a significant change in circumstances occurs, which affects this assessment, and that is within the control of the lessee.
No other material estimates and judgments are applied by the Group with regards to leases.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 155
Movements in right-of-use assets and related lease liabilities Set out below, are the carrying amounts of the Group’s leased (right-of-use) assets and lease liabilities and the movements during the period. Tank storage Machinery and Lease Note Land Buildings terminals equipment Total liabilities Opening balance at 31 December 2018 – – – – – – Initial Application IFRS 16 1.1 551.4 29.0 24.2 8.9 613.5 - 677.6 Opening balance at 1 january 2019 551.4 29.0 24.2 8.9 613.5 - 677.6 Movements: Additions 3.0 0.5 – 1. 1 4.6 - 4.6 Disposal – – - 0.4 – - 0.4 – Depreciation 3.7 - 24.2 - 4.9 - 0.7 - 3.4 - 33.2 – Impairment 3.8 - 0.2 – – – - 0.2 – Remeasurement 3.6 1. 7 0.2 0.1 5.6 - 5.6 Unwinding interest – – – – – - 22.4 Payments – – – – – 53.1 Divestments/reclassification to assets held for sale - 78.7 – - 17.3 - 0.8 - 96.8 104.3 Exchange rate differences 9.8 0.1 – – 9.9 - 12.1 Carrying amount at 31 December 2019 464.7 26.4 6.0 5.9 503.0 - 564.9
Purchase price of operating assets 488.4 32.8 6.5 8.7 536.4 – Accumulated depreciation and impairment - 23.7 - 6.4 - 0.5 - 2.8 - 33.4 – Carrying amount at 31 December 2019 464.7 26.4 6.0 5.9 503.0 - 564.9 Movements: Additions 47.8 34.0 – 5.4 87.2 - 87.2 Disposal – - 0.5 – – - 0.5 1. 5 Depreciation 3.7 - 28.2 - 4.6 - 0.5 - 3.9 - 37.2 – Remeasurement 115.4 - 16.9 0.1 0.4 99.0 - 99.0 Unwinding interest – – – – – - 21.1 Payments – – – – – 47.8 Exchange rate differences - 18.8 - 0.4 - 0.1 – - 19.3 23.7 Carrying amount at 31 December 2020 580.9 38.0 5.5 7. 8 632.2 - 699.2
Purchase price of operating assets 631.0 41.7 6.5 13.1 692.3 – Accumulated depreciation and impairment - 50.1 - 3.7 - 1.0 - 5.3 - 60.1 – Carrying amount at 31 December 2020 580.9 38.0 5.5 7. 8 632.2 - 699.2
The weighted average incremental borrowing rate applied to the lease liabilities (including those The total cash outflows for leases for the year presented, including short-term and low-value leases, classified as held for sale) recognized at the end of 2020 was 3.2% (2019: 3.3%). The remaining amounted to EUR 53.3 million (2019: EUR 64.1 million). weighted average lease term was 25.9 years at 31 December 2020 (2019: 26.6 years).
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 156
Amounts recognized in the income statement As per 31 December 2020, there are no material lease contracts to which the Group is committed but Set out below are the amounts recognized in the income statement during the period. which have not yet commenced.
In EUR millions 2020 2019 Note 3.5 Joint ventures and associates Low-value assets lease expenses 1. 0 0.9 Vopak's interest in the principal joint ventures and associates at year-end 2020 consisted of 27 (2019: 25) Short-term lease expenses 2.8 8.3 unlisted joint ventures and 8 (2019: 8) unlisted associates. Although the Group conducts a large part of Short-term/variable leases expenses - reversal due to settlements - 5.0 – its activities by means of these joint ventures and associates, none of these entities are currently Variable lease payment expenses 1. 8 1. 8 individually material for the Group. The nature of, and changes in, the risks associated with its interests Depreciation right-of-use assets 37.2 33.2 in joint ventures and associates is primarily linked to the region and/or the activities. For the disclosure of Impairment right-of-use assets – 0.5 the nature, extent and financial effects of our joint ventures and associates, we make a distinction in the Reversed impairment right-of-use assets – -0.3 activities of the divisions Europe & Africa (limited number of oil and chemical terminals), Interest expenses on lease liabilities 21.1 22.4 Asia & Middle East, (all types of storage terminals, except LNG), LNG (joint ventures and associates with long-term contracts), and China & North Asia (mainly industrial terminals). The Americas division Total 58.9 66.8 currently has a number of joint ventures and associates mainly operating gas and industrial terminals. Maturity profile of lease contract portfolio The table below analyzes the Group's contractual lease obligations into relevant maturity categories No significant judgments were made by the Group with regard to the classification of joint ventures and based on the remaining period at the end of the reporting period. It includes the nominal payments of associates. All material joint arrangements are currently classified as joint ventures because joint control the lease liabilities that are recognized in the balance sheet as well as the nominal payments related to is established by contract and the Group only has rights to the net assets of these entities. The Group the short-term and low-value lease contracts. In addition, also a graph is including depicting the maturity currently has no material investment in a joint operation. profile of the lease contract portfolio in a graphical manner. The Group has four majority ownerships which qualify as joint ventures: a 60% majority ownership in < 1 2 -5 6-10 11-15 16-20 21-25 26-30 31-35 36-40 > 40 LNG Terminal Altamira in Mexico, a 51% majority ownership in Vopak Terminals Korea Ltd. and a 51% In EUR millions year years year years years years years years years years Total majority ownership in Vopak (Qinzhou) Jetty Co., Ltd. and in Guangxi Hualin Jetty Co., Ltd, both in China. Nominal contractual lease obligation 51.7 186.9 209.5 174.0 147.3 116.1 77.1 50.4 32.0 18.1 1,063.1 In Mexico, the Group has 50% of the voting rights. In Korea, the partner owns an exercisable call option right at any time of 1% of the shares and therefore the substantive voting rights of the Group are limited to 50%. In China, for both entities all decisions about the relevant activities of the entity are made based o a o a a a o a o on unanimous consent of the shareholders in accordance with the shareholders agreement concerned. n R ll on
2 0 The Group has a 10% equity interest in Vopak Terminal Eemshaven in the Netherlands which is classified
2 0 as an associate as it was concluded that the Group has significant influence. The Group has been appointed as operator of this terminal. As operator, Vopak has the right to appoint the management 0 board of the terminal. In addition, as 10% shareholder in the entity, Vopak is entitled to appoint one of the three members of the Supervisory Board and is able to participate in the decision-making process 0 of the entity. 0 Reference is made to note 9.11 for an overview of the principal joint ventures and associates.
2 0 20 2 2 2 0 0 0 ear ear ear ear ear ear ear ear ear ear
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 157
Accounting policies joint venture or associate together with goodwill paid on acquisition, less any impairment loss. When the Joint ventures and associates are accounted for using the equity method, which involves recognition in share in the losses exceeds the carrying amount of an equity-accounted company (including any other the Consolidated statement of income of Vopak’s share of the net result of the joint ventures and receivables forming part of the net investment in the company), the carrying amount is written down to associates for the year. Accounting policies of joint ventures and associates have been aligned where nil and recognition of further losses is discontinued, unless we have incurred legal or constructive necessary to ensure consistency with the policies adopted by the Group. Vopak’s interest in a joint obligations relating to the company in question. venture or associate is carried in the statement of financial position at its share in the net assets of the
Group's share of the total comprehensive income and the carrying amount of joint ventures and associates
Joint ventures Associates Total
In EUR millions 2020 2019 2020 2019 2020 2019 Vopak's share in net assets 721.6 700.7 473.9 309.0 1,195.5 1,009.7 Goodwill on acquisition 66.9 66.1 10.4 5.9 77.3 72.0 Carrying amount at 31 December 788.5 766.8 484.3 314.9 1,272.8 1,081.7 Initial application IFRS 16 n/a - 21.1 n/a - 11.1 n/a - 32.2 Carrying amount at 1 January 788.5 745.7 484.3 303.8 1,272.8 1,049.5 Share in profit or loss 2.7 114.0 94.4 47.2 67.4 161.2 161.8 Net profit 114.0 94.4 47.2 67.4 161.2 161.8 Other comprehensive income 5.2 4.9 2.0 - 5.0 - 16.1 - 0.1 - 14.1 Comprehensive income 118.9 96.4 42.2 51.3 161.1 147.7 Dividends received 2.9 - 75.9 - 78.8 - 58.3 - 8.6 - 134.2 - 87.4 Investments 63.9 1 7. 2 4.6 30.1 68.5 47.3 Acquisitions 107.4 – – 100.7 107.4 100.7 Redemption share capital – – - 85.2 – - 85.2 – Transfers due to change in ownership – - 6.8 – - 0.8 – - 7.6 Other 8.7 – - 0.2 – 8.5 – Exchange differences - 49.9 14.8 - 29.6 7. 8 - 79.5 22.6 Carrying amount at 31 December 961.6 788.5 357.8 484.3 1,319.4 1,272.8
Vopak's share in net assets 887.4 721.6 347.9 473.9 1,235.3 1,195.5 Goodwill on acquisition 74.2 66.9 9.9 10.4 84.1 77.3 Carrying amount at 31 December 961.6 788.5 357.8 484.3 1,319.4 1,272.8
Other comprehensive income is primarily related to the effective portion of changes in the fair value of For more information on the impairments recognized on the investments in joint ventures and cash flow hedges within the joint ventures, which are recognized through the statement of associates, reference is made to note 3.8. comprehensive income.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 158
Investments and divestments of joint ventures and associates total share the Group has in the equity of the terminal to 85%. By means of this transaction the Group 2020 obtained control over the terminal and the interest held in the terminal was classified as a subsidiary and United states - acquisition no longer as a joint venture. In December 2020, Vopak and BlackRock (50/50) acquired three industrial terminals from Dow on the U.S. Gulf Coast. The new joint venture named Vopak Industrial Infrastructure Americas (VIIA), LLC, has a The consideration paid for the additional 35% share amounted to EUR 4.5 million. The financial impact of diversified set of infrastructure assets, in three locations, with each situated alongside an active Dow this acquisition on the Group going forward is considered to be minor. Furthermore, this step-acquisition production complex. resulted in a minor exceptional gain of EUR 1.1 million.
The total consideration paid for this 50% shareholding, including transaction costs, amounted to Estonia - divestment EUR 107.4 million (USD 132.1 million). Total goodwill preliminary determined by Vopak amounts to On 3 April 2019, Vopak completed the divestment of its 50% share in the Estonian terminal Vopak E.O.S. EUR 10.8 million. The Group is still working on the notional purchase price allocation for this joint (Europe & Africa division) resulting in an exceptional gain of EUR 16.4 million (including transaction venture, and expects to finalize this in the first half of 2021. expenses), which was fully recognized in EBITDA in the second quarter of 2019. Total cash flows from this divestment amounted to EUR 10.2 million. This divestment was the outcome of the earlier In connection with this acquisition, transaction expenses were incurred for the total amount of announced strategic review. EUR 4.8 million, which were classified as an exceptional item. Colombia - acquisition China - divestment On 11 September 2019, Vopak acquired a 49% shareholding in Sociedad Portuaria el Cayao (SPEC) in In the second and third quarter of 2020, Vopak received the remaining consideration of EUR 33.0 million Cartagena, Colombia. SPEC is the only LNG import facility in Colombia, with a capacity of 170,000 cbm relating to the December 2019 divestment of its 49% equity share in the joint venture Vopak SDIC and has been in operation since 2016. The total consideration paid, including transaction costs, Yangpu Terminal in Hainan, China. Due to earlier uncertainty this deferred consideration was not yet amounted to EUR 85.2 million. There was no material goodwill recorded as part of the carrying amount recognized in 2019. As a result, the receipt of this amount also led to the recognition of an exceptional of the associate. gain of EUR 33.0 million. Reference is also made to note 2.4. China - divestment United States - newly established terminal In December 2019, Vopak divested its 49% equity share in the joint venture Vopak SDIC Yangpu Terminal On 21 April 2020, Vopak announced its initial investment in the 50/50 joint venture in Hainan, China. The terminal had a storage capacity of 1,339,000 cbm for the storage of crude and Vopak Moda Houston terminal located in the Houston Ship Channel. The investment includes petroleum products. This divestment was the outcome of the strategic review of the terminal, 46,000 cbm of various gas tanks and a new jetty for the storage and handling of chemical gases. announced in February 2018. The storage capacity has been fully rented out under long-term contracts. The transaction resulted in an exceptional gain of EUR 25.3 million, of which EUR 23.5 million is 2019 recognized as part of the Other income. This amount includes a gain of EUR 5.2 million related to the Pakistan - increase in share realization of accumulated currency translation differences that were previously recognized in equity. On 23 January 2019, Vopak acquired an additional share of 15% in the associate Engro An amount of EUR 1.8 million is recorded as part of the net finance costs which is related to the release Elengy Terminal (LNG division), bringing the total share in this associate to 44%. of a provision. For more information, reference is made to note 5.6.
The total consideration paid for the entire 44% (29% in December 2018 and 15% in January 2019), Total cash flows received from this divestment amounted to EUR 18.3 million. including transaction costs, amounted to EUR 49.4 million. Total goodwill recorded by Vopak as part of the carrying amount of the associate amounted to EUR 4.5 million. In the second half of 2019 the Group Related to this divestment, Vopak is entitled to receive an additional amount of approximately completed the notional purchase price allocation for this associate. EUR 30 million. The settlement of this additional consideration is uncertain and subject to ongoing discussion and resolution in 2020 between the parties involved and therefore has not been recognized at China - step-acquisition year-end 2019, since the criteria for recognizing a gain are not satisfied. This remaining consideration may The Group acquired on 25 January 2019, an additional 35% share in Vopak Terminal Ningbo bringing the materialize going forward, depending on how events develop.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 159
Summarized information of joint ventures and associates on a 100% basis The following information reflects the amounts presented in the financial statements of the joint ventures and associates adjusted for differences in accounting policies between the Group and the joint ventures and associates and, when applicable, the effects of the purchase price allocation performed by the Group with regard to the acquisition of the joint venture or associate.
Summarized statement of total comprehensive income
Total joint Asia & China & ventures and Of which Of which Americas Middle East North Asia Europe & Africa LNG Others associates joint ventures associates
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Revenues 43.7 24.9 654.0 632.9 194.5 217.5 49.5 53.4 326.4 323.4 – – 1,268.1 1,252.1 727.7 721.1 540.4 531.0 Other income 34.6 21.2 3.9 5.4 7. 2 70.5 – 0.1 72.2 23.2 – 1. 3 11 7. 9 121.7 8.7 4.9 109.2 116.8 Operating expenses - 51.9 - 24.5 - 150.0 - 145.5 - 42.7 - 81.8 - 17.2 - 24.6 - 93.7 - 75.3 0.1 - 1.9 - 355.4 - 353.6 - 195.9 - 195.1 - 159.5 - 158.5 EBITDA 26.4 21.6 507.9 492.8 159.0 206.2 32.3 28.9 304.9 271.3 0.1 - 0.6 1,030.6 1,020.2 540.5 530.9 490.1 489.3 Depreciation and amortization - 1.9 - 0.5 - 173.5 - 148.9 - 40.9 - 51.4 - 12.8 - 13.1 - 95.6 - 85.8 – – - 324.7 - 299.7 - 163.0 - 170.0 - 161.7 - 129.7 Operating profit (EBIT) 24.5 21.1 334.4 343.9 118.1 154.8 19.5 15.8 209.3 185.5 0.1 - 0.6 705.9 720.5 377.5 360.9 328.4 359.6 Net finance costs 2.4 3.1 - 70.5 - 47.4 - 6.8 0.8 - 9.8 - 6.2 - 78.0 - 68.5 – – - 162.7 - 118.2 - 46.3 - 49.5 - 116.4 - 68.7 Income tax - 0.1 - 0.3 - 61.5 - 64.8 - 29.4 - 50.4 - 1.5 - 2.1 - 40.6 - 35.0 – – - 133.1 - 152.6 - 80.5 - 104.5 - 52.6 - 48.1 Net profit 26.8 23.9 202.4 231.7 81.9 105.2 8.2 7. 5 90.7 82.0 0.1 - 0.6 410.1 449.7 250.7 206.9 159.4 242.8 Other comprehensive income – – - 21.0 - 61.2 – – – – 11. 5 4.7 – – - 9.5 - 56.5 9.4 4.2 - 18.9 - 60.7 Total comprehensive income 26.8 23.9 181.4 170.5 81.9 105.2 8.2 7. 5 102.2 86.7 0.1 - 0.6 400.6 393.2 260.1 211.1 140.5 182.1
Vopak's share of net profit 6.4 7. 4 70.2 67.3 33.3 41.5 3.3 2.1 48.0 43.6 – - 0.1 161.2 161.8 114.0 94.4 47.2 67.4 Vopak's share of other comprehensive income – – - 5.9 - 16.4 – – – – 5.8 2.3 – – - 0.1 - 14.1 4.9 2.0 - 5.0 - 16.1 Vopak's share of total comprehensive income 6.4 7. 4 64.3 50.9 33.3 41.5 3.3 2.1 53.8 45.9 – - 0.1 161.1 147.7 118.9 96.4 42.2 51.3
2020 2019 In January 2020, the associate PT2SB repaid part of its preference share capital, which resulted in a In the first half of 2019, the associate industrial terminal PT2SB in Malaysia (Asia and Middle East cash inflow of EUR 85.2 milion for the Group. division) commissioned additional capacity, bringing its total capacity to 1,496,000 cbm. This led to a significant increase in the results from associates during 2019. Furthermore, in the fourth quarter of 2020, our associate industrial terminal (PT2SB) in Malaysia recognized an accounting loss of EUR 19.8 million (Vopak share), partly in connection with prior year. This was related In the fourth quarter of 2019, an exceptional loss of EUR 14.7 million was recognized by the Group as to this terminal being fully commissioned, and settlement of various customer contract discussions. As part of the result of joint ventures due to the recognition of a tax provision that was recognized in one well as finalizing the accounting of several specific non-cash items related to depreciation charges on fixed of the joint ventures in the Asia & Middle East division. In relation to the provision, management has assets and deferred tax liabilities in connection with the complex tax environment. assessed that based on the current facts and circumstances it is no longer more likely than not that the court case will be won. This terminal is also expected to repay around EUR 50 million (Vopak share) of share capital, in 2021 or 2022. In December 2019, a total one-off gain (net Vopak share) was recognized at our associate Vopak Terminal Haiteng (China & North Asia division) for the amount of EUR 7.8 million. This total amount was mainly related to the final customer settlements. Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 160
Summarized statement of financial position at 31 December
Total joint Asia & China & ventures and Of which Of which Americas Middle East North Asia Europe & Africa LNG Others associates joint ventures associates
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Non-current assets 992.5 479.8 2,710.0 3,054.4 809.2 700.3 208.1 205.4 1,979.2 2,137.5 – – 6,699.0 6,577.4 3,696.4 3,190.5 3,002.6 3,386.9 Cash and cash equivalents 9.7 14.1 294.6 574.0 133.0 119.0 10.4 11. 0 108.3 119.6 – – 556.0 837.7 263.4 219.5 292.6 618.2 Other current assets 25.6 11. 5 310.5 268.2 79.1 135.9 21.3 22.2 66.5 53.3 – – 503.0 491.1 288.0 206.3 215.0 284.8 Total assets 1,027.8 505.4 3,315.1 3,896.6 1,021.3 955.2 239.8 238.6 2,154.0 2,310.4 – – 7,758.0 7,906.2 4,247.8 3,616.3 3,510.2 4,289.9
Financial non-current liabilities 324.8 21.5 1,526.6 1,846.9 207.6 162.1 151.1 153.7 1,098.4 1,267.5 – – 3,308.5 3,451.7 1,475.2 1,234.5 1,833.3 2,217.2 Other non-current liabilities – – 296.1 146.4 30.3 29.9 14.1 13.9 238.4 260.7 – 0.8 578.9 451.7 316.5 219.2 262.4 232.5 Financial current liabilities 4.5 - 0.4 126.0 45.5 29.5 23.2 18.1 18.7 126.3 145.6 – – 304.4 232.6 149.6 133.2 154.8 99.4 Other current liabilities 21.2 23.8 316.8 433.7 104.4 89.9 14.6 11. 2 58.9 56.7 – 0.2 515.9 615.5 343.0 408.9 172.9 206.6 Total liabilities 350.5 44.9 2,265.5 2,472.5 371.8 305.1 197.9 197.5 1,522.0 1,730.5 – 1.0 4,707.7 4,751.5 2,284.3 1,995.8 2,423.4 2,755.7
Net assets 677.3 460.5 1,049.6 1,424.1 649.5 650.1 41.9 41.1 632.0 579.9 – - 1.0 3,050.3 3,154.7 1,963.5 1,620.5 1,086.8 1,534.2
Vopak's share of net assets 245.4 140.0 364.5 466.8 290.9 280.7 19.5 19.1 315.0 289.4 – - 0.5 1,235.3 1,195.5 887.4 721.6 347.9 473.9 Goodwill on acquisition 10.8 – 5.1 5.6 6.3 6.4 – – 61.9 65.3 – – 84.1 77.3 74.2 66.9 9.9 10.4 Vopak's carrying amount of net assets 256.2 140.0 369.6 472.4 297.2 287.1 19.5 19.1 376.9 354.7 – - 0.5 1,319.4 1,272.8 961.6 788.5 357.8 484.3
Contingent assets and liabilities Note 3.6 Assets held for sale The joint ventures and associates of the Group are currently, and may from time to time become, involved in a number of legal proceedings, including inquiries from, or discussions with, governmental Accounting policies authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities Non-current assets and disposal groups are classified as held for sale when their carrying amount is to of the joint ventures and associates as at year-end related to legal cases, it is based on the current facts be recovered principally through a sales transaction and a sale is considered highly probable at the end and circumstances not believed that they may have a material adverse effect on the financial position of the reporting period. They are stated at the lower value of the carrying amount and the fair value less or profitability of the Group. Due to inherent uncertainties, the Group cannot make any accurate expected selling costs. When the criteria for the held for sale classification have been met, the non- quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings current assets subject to depreciation and amortization are no longer depreciated or amortized. In referred to in this report, however costs in complex litigation may be substantial. addition, equity accounting for joint ventures and associates ceases once classified as held for sale.
For an overview of the commitments and contingent liabilities relating to our joint ventures and associates, reference is made to note 9.8.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 161
Note 3.7 Depreciation and amortization Key accounting estimates and judgments At the end of the reporting period, management has to assess if the value of the assets will be Accounting policies recovered principally through a divestment transaction rather than through continued use and The expected useful life of software is normally subject to a maximum of seven years. Amortization of what the likelihood is that an asset will be divested within a year. This assessment is based on the other intangible assets and licenses is based on the term of the validity of the contract or term of the facts and circumstances at that date. These facts and circumstances may change and could result validity period and varies from 5-30 years. in a situation where assets are divested, which were not classified as held for sale at year-end. When classifying non-current assets as held for sale, management makes estimates of their fair Depreciation of property, plant and equipment is computed from the date the asset is available for use, value (sales price and expected costs to sell). Depending on the nature of the non-current using the straight-line method over the expected useful life and taking the estimated residual value into assets, the estimated fair value may be associated with uncertainty and possibly adjusted account. The useful life of the main assets is as follows: subsequently. Measurement of the fair value of non-current assets is categorized as level 2 in • for buildings 10-40 years the fair value hierarchy as measurement is not based on observable market data. • for main components of tank storage terminals 10-40 years • for IT hardware 3-5 years • for machinery, equipment and fixtures 3-10 years. Assets and liabilities classified as held for sale • Land is not depreciated.
In EUR millions 31-Dec-20 31-Dec-19 The residual value and useful life of intangible assets and property, plant and equipment are reviewed Property, plant and equipment – 132.6 annually and adjusted if necessary. Other non-current assets – 8.3 Current assets – 3.0 For the accounting policies related to the amortization of the right-of-use assets recognized in relation to Total assets held for sale – 143.9 the leases of the Group, reference is made to note 3.4.
Provisions 1. 5 Other non-current liabilities – 14.5 Current liabilities – 2.0 Key accounting estimates and judgments Total liabilities related to assets held for sale – 18.0 Property, plant and equipment form a substantial part of the total assets of the company, while Net assets held for sale of disposal groups – 125.9 periodic depreciation charges form a substantial part of the annual operating expenses. The useful life and residual value determined by the Executive Board based on its estimates and For the divestments realized during the years presented, reference is made to note 3.1. and note 3.5. assumptions have a major impact on the measurement and determination of results of property, plant and equipment. The useful life of property, plant and equipment is partly estimated based 2020 on their useful productive lives, experiences related to such assets, the maintenance history and As at year-end 2020 there were no assets and liabilities classified as held for sale. the period during which the company has the economic benefits from the utilization of the assets. Periodic reviews show whether changes have occurred in estimates and assumptions as 2019 a result of which the useful life and/or residual value need to be adjusted. Such an adjustment On 9 October 2019, Vopak announced that it concluded the discussions with the minority shareholder in will be made prospectively. Vopak Terminal Algeciras and that it had acquired the 20% of the shares held by the minority shareholder. At the same time, Vopak held an agreement for the sale of 100% of the shares in Vopak Terminal Algeciras to First State Investments. This terminal was classfied as held for sale as at year- For the key accounting estimates and judgments made with regards to the right-of-use assets end 2019, and was subsequently divested on 31 January 2020. recognized in relation to the leases of the Group, reference is made to note 3.4.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 162
Depreciation and amortization market, adjusted for a risk premium and specific risks relating to the countries and risks specific to the assets. The 15-year bonds period reflects the average remaining useful life of the principal assets. As a In EUR millions Note 2020 2019 company based in Europe, the Group assumes the long-term market equity risk premium to be Amortization intangible assets 3.2 1 7. 6 15.4 6.4% (2019: 6.0%). Depreciation owned assets 3.3 244.7 242.1 Depreciation right-of-use assets 3.4 37.2 33.2 Total 299.5 290.7 Key accounting estimates and judgments Impairment analysis Note 3.8 Impairment tests and impairments When performing an impairment test, management makes an assessment of whether the cash-generating unit (mostly an individual terminal) will be able to generate positive net cash Accounting policies flows that are sufficient to support the value of the intangible assets, property, plant and The carrying amount of goodwill is tested for impairment annually in the fourth quarter (unless there is equipment, and financial assets. reason to do so more frequently), while all assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amounts for those assets may not be recoverable. If For value in use, the assessment is based on estimates of future expected cash flows it is determined that assets are impaired, the carrying amounts of those assets are written down to their (value in use) made on the basis of the budget for the coming year and two subsequent plan recoverable amount, which is the higher of fair value less costs of disposal and value in use. years, which form the basis for the 15-year period discounted cash flow model. Key assumptions applied are generally: the expected occupancy, the estimated storage rate per cbm (for revenues Impairments of a cash-generating unit are allocated to the assets of the cash-generating unit on a not covered by long-term contracts), sustaining capex expenditures, expected growth rates and proportional basis. Impairments of intangible assets and property, plant and equipment are presented in the estimated terminal value after the 15-year period, together with the applied discount rates. the statement of income under Impairment. Impairments, except those related to goodwill, are reversed as applicable to the extent that the events or circumstances that triggered the original Fair value less cost of disposal is primarily based either on comparable market-multiples and/or impairment have changed. (indicative) (non-)binding bids or discounted cash flow models from the perspective of a willing buyer in an orderly transaction. All financial assets, including joint ventures and associates, are reviewed for impairment. If there is objective evidence of impairment as a result of one or more events after initial recognition, an In certain situations, the fair value less cost of disposal of a terminal may be based on impairment loss is recognized in the statement of income. The impairments for joint ventures and (preliminary) offers received from interested parties (level 2 fair value). Although such offers are associates are presented under Result of joint ventures and associates. conditional/preliminary by nature, management considers whether these offers may be representative of the fair value of the terminals concerned and assesses whether it is probable Estimates used to measure the recoverable amount that these terminals will be sold in the coming twelve months after the reporting period, Value in use is determined as the amount of estimated discounted future cash flows. For this purpose, resulting in a situation where the carrying amount will be recovered principally through a sale assets are grouped into cash-generating units based on separately identifiable and largely independent instead of through continued use. cash flows. The cash flow projections are based on revenues, operating expenses and sustaining capital expenditures of the approved budget for the coming year and the two subsequent planning years. Cash These key assumptions are based on the current facts and circumstances and information flows beyond the previously mentioned period of three years are extrapolated, using a stable or available to management. By nature, these assumptions are subject to developments and decreasing growth rate, unless an increasing rate can be substantiated. Given that the cash flows are change in later periods. This could potentially lead to (reversal of) impairments of individual estimated before taxes, the discount rates used to calculate the present value of the cash flows are terminals going forward. pre-tax rates based on the risk-free rates for 15-year bonds issued by the government in the relevant
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 163
Impairment test results Other intangible assets No material impairments were recognized in other intangible assets in 2020 relating to individual In EUR millions Note 2020 2019 projects and/or assets. The net impairment of EUR 8.8 million was recognized in connection with the Intangible assets 3.2 9.6 3.3 (reversal of) impairment of the cash generating units in Panama and Canada. For more information Reversal impairment intangible assets 3.2 - 0.8 – reference is made to the paragraph on the Property, plan and equipment later in this note. Property, plant and equipment - owned assets 3.3 33.3 13.7 Property, plant and equipment - right-of-use assets 3.4 – 0.2 In the third quarter of 2019, Vopak recognized an impairment of EUR 2.5 million related to the Reversal impairment property, plant and equipment - owned assets 3.3 - 12.0 – cancellation of (part of) an IT project as a result of portfolio developments. An amount of EUR 0.8 million Total 30.1 1 7. 2 was recognized relating to the Quebec City Terminal. Refer to paragraph Terminals in operation later in this note for more information. Intangible assets - Goodwill A summary of the carrying amount of goodwill by geographical area, which is equal to the operating Property, plant and equipment segments, is presented below. An operating segment is also the level at which goodwill is tested Cancelled projects for impairment. There were no material impairments related to cancelled projects in both years presented.
In EUR millions 2020 2019 Terminals in operation Americas 14.5 15.6 Based on consistently applied methodology, management has assessed that the value in use for a very Asia & Middle East 18.2 19.6 limited number of terminals in operation, is lower than the carrying amount. For these individual China & North Asia 4.0 4.4 terminals, also the fair value less cost of disposal has been calculated in order to assess whether this Europe & Africa 1. 8 1. 8 value exceeds the value in use and the carrying amount of the assets. In such situations, the fair value Carrying amount at 31 December 38.5 41.4 less cost of disposal for terminals or assets which are actively being marketed by the company, may be based primarily on offers received from interested parties (level 2 fair value). The Group has limited goodwill balances as it mostly develops its own greenfield terminals instead of acquiring new subsidiary terminals. For the other terminals, the fair value less cost of disposal is primarily based on a combination of the estimated normalized EBITDA and transaction multiples observable in the merger and acquisition (M&A) No impairments of goodwill were recognized in 2020 and 2019. markets for comparable terminals (level 2 fair value) together with discounted cash flow models (level 3 fair value). Assumptions applied The recoverable value of an operating segment, which includes goodwill, is based on the value in use. In The value in use and fair value less cost of disposal assessments may change over time, among others the impairment tests, the growth factors for years four through fifteen were based on the inflation rate due to changes in the business environment and/or outcome of decisions taken by management, and within the range of 1.8% to 2.4% depending on the operating segment (2019: 1.6% to 2.6%). The when applicable could result in (reversal of) impairment. pre-tax discount rate used depends on the (average) risk profile of the cash-generating unit and was 7.7% (2019: 7.0%) for Asia & Middle East, 9.6% (2019: 10.7%) for Americas and 10.4% (2019: 9.2%) for 2020 China & North Asia. The operating profit included in the calculations is based on the approved budget for Vopak Bahia las Minas terminal - Panama (impairment) 2021 and the subsequent plan years. In the fourth quarter an impairment was recognized for the Vopak Bahia las Minas terminal in Panama for an amount of EUR 42.9 million. The impairment is primarily related to the business environment in which Sensitivity the terminal currently operates. Slow progress with offshore bunkering opportunities is limiting the The value in use calculations indicated more than sufficient headroom, such that a reasonably possible demand and the growth potential of the Atlantic bunker market in Panama. This impairment may reverse change in key assumptions would not result in an impairment of the related goodwill. when the current economic circumstances improve going forward.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 164
Vopak Terminals of Canada - Quebec City (reversal of impairment) In 2019, the Quebec City terminal in Canada was fully impaired due to uncertainty with respect to renewal of the land lease contract. In 2020, this impairment has been fully reversed which, offset by depreciation of expenses, resulted in an exceptional item of EUR 12.8 million in 2020. This reversal was the result of positive and ongoing discussions with the local authorities. Reversal of the provisions that were recorded in 2019, together with the impairment resulted in additional exceptional items of EUR 1.5 million.
2019 Vopak Terminals of Canada - Quebec City (impairment) In the fourth quarter of 2019, the Intangible assets and Property, plant and equipment of our oil terminal in Quebec City in Canada were fully impaired for EUR 14.7 million. Additional provisions for the terminal for EUR 2.2 million were recognized (note 9.5). This impairment is triggered by the fact that the current land lease agreement expires in 2020, and no agreement had been reached yet on the renewal of the lease, which was subject to ongoing discussions at year-end 2019.
Joint ventures and associates There were no impairments recognized on joint ventures and associates for both years presented.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 165
Section 4 Working capital The creation and release of a provision for impaired trade receivables are recognized under Other operating expenses in the income statement. This section presents details on the working capital items that the Group uses for operating our assets and providing services to our customers. In line with the nature of the business, the net working capital Other receivables also include the dividend receivables from joint ventures and associates for which the is only a relatively small part of the total assets of the Group. decision about dividend distribution was taken before year-end.
This section comprises notes to understand the developments in working capital: Trade and other receivables • 4.1 Changes in working capital • 4.2 Trade and other receivables and related credit risk In EUR millions 2020 2019 • 4.3 Trade and other payables Trade debtors gross 103.9 115.1 Provision for impairment of trade debtors - 2.4 - 0.4 Note 4.1 Changes in working capital Trade debtors net 101.5 114.7 Taxes receivable 55.1 45.5 In EUR millions Note 2020 2019 Other receivables 119.5 135.9 Movements in other current assets Total 276.1 296.1 (excluding cash and cash equivalents) 2.9 - 15.6 - 64.0 Movements in other current liabilities (excluding bank overdrafts and dividends) 2.9 49.0 8.2 The effect of the recognized expected credit losses is negligible for both years presented. There was no Total 33.4 - 55.8 indication as at the statement of financial position date that these receivables will not be recovered, other than as already provided for. The Group does not have a significant credit risk exposure on a single customer. For more information reference is also made to note 2.3. Note 4.2 Trade and other receivables and related credit risk Trade and other receivables are exposed to credit risk which could result in impairment losses. This note Trade receivables includes general information about trade and other receivables as well as specifications and explanations Ageing of trade receivables of the related risk. 2020 2019
Accounting policies In EUR millions Gross Provision Net Gross Provision Net Trade receivables are amounts due from customers for services rendered in the ordinary course of Not past due 70.1 – 70.1 79.8 – 79.8 business. Trade and other receivables are recognized initially at fair value. The Group holds trade Past due up to 3 months 25.0 - 1.7 23.3 28.1 – 28.1 receivables with the objective to collect the contractual cash flows and therefore the Group measures Past due 3 to 6 months 3.9 – 3.9 3.2 – 3.2 them subsequently at amortized cost using the effective interest method, less any provision for Past due more than 6 months 4.9 - 0.7 4.2 4.0 - 0.4 3.6 impairment. Trade receivables are generally due for settlement within 30 days and therefore are all Total 103.9 - 2.4 101.5 115.1 - 0.4 114.7 classified as current.
The group applies the simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
Trade receivables are written off (impaired) when objective evidence indicates that there is no reasonable expectation of recovery. This is based on an individual review for impairment due to an increase of the credit risk of the customer, past due amounts and taking into account any retention right on product stored for this customer.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 166
Provision for bad debt Note 4.3 Trade and other payables
In EUR millions 2020 2019 Accounting policies Balance at 1 January - 0.4 - 0.8 Trade and other payables represent liabilities for goods and services provided by suppliers to the Group Impairments - 2.0 - 0.1 prior to the end of the financial year which are unpaid. They are presented as current liabilities unless Receivables written off during the year as uncollectible – 0.3 payment is not due within 12 months after the reporting period. Payments – 0.2 Balance at 31 December - 2.4 - 0.4 Trade and other payables are initially recognized at their fair value and subsequently measured at amortized cost using the effective interest method. Exposure to bad debts is mostly related to rendering services to international manufacturers and traders. The value of the products stored for these customers usually exceeds the value of the receivables and Trade and other payables Vopak generally has the right of retention. In EUR millions 2020 2019 Historically, amounts written off as uncollectible have been very low, in line with the nature of the Trade payables 51.4 41.0 business model, which is also the case for the years presented. Also the COVID-19 pandemic of 2020 Accrued expenses 147.8 127.8 did not result in a material increase in the provision for bad debt as no material increase in the credit risk Deferred revenues 18.6 16.6 of the accounts receivable portfolio was observed, despite the fact that the monitoring of the credit risk Accrued interest expenses 4.8 5.7 of our customers was further intensified in connection with the pandemic. Wage tax and social security charges 6.9 6.4 Other creditors 132.2 146.6 Other receivables Total 361.7 344.1 The total dividend receivable from joint ventures and associates amounted to nil at the end of 2020 (2019: EUR 4.2 million). There were also no material amounts overdue nor impaired for the other items included in the Other receivables.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 167
Section 5 Capital structure EQUITY
Vopak is a capital-intensive company. Vopak’s funding strategy is focused on ensuring continuous access Note 5.1 Issued capital, share premium, treasury shares and capital to capital markets so that funding capital is available at a time of the company's choice and at an management acceptable cost. The notes in this section provide insight into the capital structure and financing items of the Group. Accounting policies Treasury shares that are reacquired are recognized at cost and deducted from equity until the shares are In this section, the following notes are presented: cancelled or reissued. Upon cancellation, treasury shares are deducted from the share capital at their nominal value of EUR 0.50 per share. Any difference between the carrying amount and the consideration Equity: received when treasury shares are reissued, is recognized directly in equity. • 5.1 Issued capital, share premium, treasury shares and capital management • 5.2 Other reserves Share capital • 5.3 Retained earnings The company´s authorized share capital amounted to EUR 190,800,000 as at 31 December 2020 divided • 5.4 Non-controlling interests into 140,000,000 ordinary shares, 190,800,000 protective preference shares and 50,800,000 cumulative finance preference shares, all with a nominal value of EUR 0.50 each. Borrowings: • 5.5 Interest-bearing loans and net debt The issued share capital at 31 December 2020 consisted of 125,740,586 (2019: 127,835,430) ordinary • 5.6 Net finance costs shares, of which 345,736 (2019: 209,984) were held in the treasury stock in connection with existing commitments under the long-term incentive plans. No cumulative finance preference shares were The financial risk management applied by the Group can be found in issued during the years presented. Section 6 Financial Risk Management. During 2020, the company completed a share buyback program to return approximately EUR 100 million to shareholders. In the period 13 February 2020 up to and including 23 October 2020, a total of 2,094,844 ordinary shares, 1.6% of the company’s outstanding shares, were repurchased, at an average price of EUR 47.74 per share.
Numbers Amounts in EUR millions
Financing Issued ordinary preference Treasury Issued Share Treasury shares shares shares Total shares shares capital premium reserve Balance at 31 December 2018 127,835,430 – 127,835,430 - 170,597 63.9 194.4 - 7.3 Purchase treasury shares – – – - 65,370 – – - 2.6 Vested shares under equity-settled share-based payment arrangements – – – 25,983 – – 1. 0 Balance at 31 December 2019 127,835,430 – 127,835,430 - 209,984 63.9 194.4 - 8.9 Purchase treasury shares – – – - 180,000 – – - 8.0 Share buyback – – – - 2,094,844 – – - 100.1 Cancellation of shares issued - 2,094,844 – - 2,094,844 2,094,844 - 1.0 – 100.1 Vested shares under equity-settled share-based payment arrangements – – – 44,248 – – 1. 9 Balance at 31 December 2020 125,740,586 – 125,740,586 - 345,736 62.9 194.4 - 15.0
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 168
Capital management other capital providers. Vopak aims to maintain a healthy financial position through capital-disciplined Vopak is a capital-intensive company. Vopak's funding strategy is directed at establishing and maintaining investment decisions, effective working capital management, long-term funding and a balanced dividend an optimal financing structure that takes due account of the current asset base and the current and policy and is continuously reviewing its capital structure options, including but not limited to equity(- future investment programs. Vopak seeks access to capital markets and flexibility at acceptable terms linked) or other (debt) capital instruments, to effectively finance the future growth that Vopak aims for. and conditions, including finance cost. The Group works actively to maintain and further develop the already established diversified funding base, with regard to the number of markets and the number of investors. A solid capital structure supports Vopak's objective to create long-term shareholder value while meeting the agreed financial ratios included in the debt covenants (see note 5.5) and other requirements with its
Note 5.2 Other reserves Translation Revaluation reserve Revaluation reserve Total In EUR millions reserve derivatives financial assets Other reserves other reserves Balance at 31 December 2018 - 25.1 - 110.1 9.4 1.3 - 124.5 Exchange differences on net investments 41.8 – – – 41.8 Effective part of hedges of net investments - 13.3 – – – - 13.3 Tax effect on exchange differences and hedges 0.3 – – – 0.3 Use of exchange differences on net investments (to statement of income) - 12.2 – – – - 12.2 Fair value change other investments – – 9.1 – 9.1 Movements in effective part of cash flow hedges – 10.2 – – 10.2 Tax effect on movements in cash flow hedges – 0.2 – – 0.2 Use of effective part of cash flow hedges (to statement of income) – - 3.3 – – - 3.3 Tax effect on use of cash flow hedges – 0.7 – – 0.7 Movements in effective part of cash flow hedges joint ventures – - 14.9 – – - 14.9 Balance at 31 December 2019 - 8.5 - 117.2 18.5 1.3 - 105.9 Exchange differences on net investments - 180.6 – – – - 180.6 Effective part of hedges of net investments 61.5 – – – 61.5 Tax effect on exchange differences and hedges 1. 2 – – – 1. 2 Use of exchange differences on net investments (to statement of income) - 0.1 – – – - 0.1 Use of effective part of hedges of net investments (to statement of income) 2.5 – – – 2.5 Fair value change other investments – – - 1.9 – - 1.9 Movements in effective part of cash flow hedges – 3.7 – – 3.7 Tax effect on movements in cash flow hedges – - 0.5 – – - 0.5 Use of effective part of cash flow hedges (to statement of income) – - 0.4 – – - 0.4 Tax effect on use of cash flow hedges – 0.1 – – 0.1 Movements in effective part of cash flow hedges joint ventures – - 0.8 – – - 0.8 Other – – – 8.5 8.5 Cancellation of shares issued – – – - 99.1 - 99.1 Remeasurements of defined benefit plans – – – - 6.8 - 6.8 Tax on remeasurements of defined benefit plans – – – 1. 6 1. 6 Balance at 31 December 2020 - 124.0 - 115.1 16.6 - 94.5 - 317.0
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 169
The translation reserve includes all exchange differences resulting from the translation of the financial Note 5.4 Non-controlling interests statements of foreign entities. It also includes the exchange differences on liabilities and the effective currency component of fair value changes of derivative financial instruments (net of tax), to the extent In EUR millions 2020 2019 that they hedge the net investments of the Group in foreign entities and hedge accounting is applied. Balance at 31 December 147.8 161.5 Initial application IFRS 16 – - 9.4 The Group has elected to recognize changes in the fair value of specific investments in equity securities Balance at 1 January 147.8 152.1 in other comprehensive income. These changes are accumulated within the Revaluation reserve financial Net profit 29.6 32.8 assets. Amounts are transferred from this reserve to retained earnings when the equity securities Dividend paid in cash - 24.6 - 38.8 concerned are derecognized. Capital injection 3.8 4.1 Movements in effective part of cash flow hedges - 0.1 - 0.4 The revaluation reserve derivatives contains the effective part of the accumulated change in the fair Acquisitions – 1. 9 value of the cash flow hedges, net of tax, in respect of which the hedged future transaction has not yet Transaction with Non-Controlling interests – - 9.0 taken place. The table below provides an overview of the estimated maturity profile of the revaluation Exchange differences - 11.6 5.1 reserve derivatives. Balance at 31 December 144.9 147.8
In EUR millions 2021 2022 2023 2024 2025 > 2025 Total The Group has one subsidiary with a material non-controlling interest (NCI). The aggregated information Use of revaluation reserve derivatives 47.9 43.9 127.5 22.6 - 19.1 - 107.7 115.1 of NCI and the information of the material subsidiary is shown in the table below.
Profit allocated Dividends paid Accumulated Note 5.3 Retained earnings to NCI to NCI NCI NCI % (in EUR millions) (in EUR millions) (in EUR millions)
In EUR millions 2020 2019 31-Dec- 31-Dec- Balance at 31 December 2,903.8 2,556.3 2020 2019 2020 2019 2020 2019 20 19 Initial application IFRS 16 – - 85.1 Total 29.6 32.8 24.6 38.8 144.9 147.8 Balance at 1 January 2,903.8 2,471.2 of which Vopak Terminals Singapore Pte. Ltd. 30.5% 30.5% 25.8 29.1 21.1 35.2 101.3 105.1 Dividend paid in cash - 146.1 - 140.5 Remeasurements of defined benefit plans – - 5.5 Measurement of equity-settled share-based payment arrangements 4.5 8.6 Vested shares under equity-settled share-based payment arrangements - 4.0 - 1.0 Net profit attributable to owners of parent 300.9 571.0 Other - 3.7 – Balance at 31 December 3,055.4 2,903.8
Of the reserves, EUR 2,197.6 million (2019: EUR 2,305.7 million) can be distributed freely (see note 4 of the Company Financial Statements). The actual dividend paid in cash per ordinary share in 2020 was EUR 1.15 (2019: EUR 1.10).
For the proposed dividend per share, reference is made to the paragraph Profit Appropriation.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 170
The summarized financial information (at 100%) regarding BORROWINGS Vopak Terminals Singapore Pte. Ltd. is as follows: Note 5.5 Interest-bearing loans and net debt In EUR millions 31-Dec-20 31-Dec-19 Total non-current assets 740.5 796.6 Accounting policies Cash and cash equivalents 8.7 9.2 Interest-bearing loans and borrowings are recognized initially at fair value net of directly attributable Other current assets 51.3 54.0 transaction costs. After initial recognition, these items are subsequently measured at amortized cost, Total assets 800.5 859.8 applying the effective interest method unless the interest rate has been converted in a hedge relation from fixed into floating by means of a fair value hedge. In that case, the carrying amount is adjusted for Current liabilities 76.3 168.9 the fair value changes caused by the hedged risk. Total non-current liabilities 409.2 366.9 Total liabilities 485.5 535.8 Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. Total net assets 315.0 324.0
Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all In EUR millions 2020 2019 of the facility will be drawn down, the fee is capitalized as pre-payment for liquidity services and Revenues 224.3 234.0 amortized on a straight-line basis over the period of the facility to which it relates. Net profit 83.1 94.1 Other comprehensive income - 26.0 12.8 For the accounting policies of the Lease liabilities, reference is made to note 3.4. Total comprehensive income 57.1 106.9
Operating cash flow 96.6 160.3 Increase/decrease (-) in cash and cash equivalents - 0.5 - 0.7
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 171
Debt reconciliation
Interest-bearing Cash and cash Short-term Interest- Net interest- loans - lease Total interest- In EUR millions equivalents borrowings bearing loans bearing debt1 liabilities bearing debt Carrying amount at 31 December 2018 54.6 - 59.0 - 1,820.6 - 1,825.0 – - 1,825.0 Initial application IFRS 16 – – 23.1 23.1 - 677.6 - 654.5 Carrying amount at 1 January 2019 54.6 - 59.0 - 1,797.5 - 1,801.9 - 677.6 - 2,479.5 Cash flows 35.1 - 119.0 157.6 73.7 53.1 126.8 Other non-cash movements - 2.5 – - 1.1 - 3.6 71.7 68.1 Exchange differences 0.8 – - 39.4 - 38.6 - 12.1 - 50.7 Carrying amount at 31 December 2019 88.0 - 178.0 - 1,680.4 - 1,770.4 - 564.9 - 2,335.3 Cash flows - 29.2 - 27.0 - 180.0 - 236.2 47.8 - 188.4 Other non-cash movements 2.5 – - 1.1 1. 4 - 205.9 - 204.5 Exchange differences - 2.3 – 11 7. 3 115.0 23.8 138.8 Carrying amount at 31 December 2020 59.0 - 205.0 - 1,744.2 - 1,890.2 - 699.2 - 2,589.4
Current assets 68.3 – – 68.3 – 68.3 Non-current liabilities – – - 1,616.3 - 1,616.3 - 668.5 - 2,284.8 Current liabilities - 9.3 - 205.0 - 127.9 - 342.2 - 30.7 - 372.9 Carrying amount at 31 December 2020 59.0 - 205.0 - 1,744.2 - 1,890.2 - 699.2 - 2,589.4 1 Net interest-bearing debt forms the basis for the net-debt : EBITDA calculation mentioned in our financial ratios.
2020 In July 2020, Vopak entered into agreements for a new debt issuance in the US Private Placement (USPP) market consisting of senior tranches with a total value of USD 150 million and EUR 150 million and subordinated tranches with a total value of USD 200 million. The notional amounts of these USPPs were received in the fourth quarter of 2020.
In July 2020, Vopak Terminals Singapore completed its refinancing by entering into a new 3-year financing of SGD 300 million (approximately EUR 190 million), consisting of a term loan and a revolving credit facility.
2019 During 2019 the Group fully repaid its subordinated debt for the amount of EUR 92.0 million.
For more information, on the effects of IFRS 16 on the total interest-bearing debt, reference is made to note 3.4.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 172
Financial ratios reconciliation To provide insight into how financial ratios for debt covenant purposes are calculated and on how these reconcile to the IFRS figures, a financial ratios reconciliation is provided in the table below:
In EUR millions Note 2020 2019 EBITDA 789.4 1,038.5 -/- Result joint ventures and associates 161.2 161.8 +/+ Gross dividend received from joint ventures and associates 142.4 95.1 -/- IFRS 16 Adjustment in operating expenses for former operating leases 1.1, 3.4 46.2 49.9 -/- Exceptional items 2.7 223.4 -/- Divestments full year adjustment 1. 1 45.2 EBITDA for ratio calculation 720.6 653.3
Net interest-bearing debt - 2,589.4 - 2,335.3 -/- IFRS 16 Adjustment in lease liabilities for former operating leases 1.1, 3.4 - 689.8 - 564.9 Derivative financial instruments (currency) 3.3 56.2 Credit replacement guarantees 9.8, 9.9 - 80.8 - 87.1 -/- Subordinated loans - 162.6 – Cash equivalent included in HFS assets – 2.5 Senior net debt for ratio calculation - 1,814.5 - 1,798.8
Financial ratios Senior net debt : EBITDA 2.52 2.75 Interest cover1 10.9 10.4 1 Interest cover is the ratio of the EBITDA and the net finance costs.
With a Senior net debt : EBITDA ratio of 2.52 (2019: 2.75) and an interest cover ratio of 10.9 (2019: 10.4), Vopak met the applicable financial ratios as at 31 December 2020.
Like prior year, the application of IFRS 16 has no effect on the debt covenants of the Group as the related ratios are based on the accounting policies that were applicable on the date of entering into the debt agreements (‘frozen GAAP’).
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 173
Average remaining maturities and main covenant ratios bank loan and a credit facility of Vopak Terminal Singapore Pte Ltd. (VTS). The PPs consisted of various At year-end 2020, the interest-bearing loans mainly consisted of unsecured Private Placements (PPs) in financing programs entered into in 2009, 2012 and 2020. For further details on currency and interest rate the US and Asian market, the Revolving credit facility of Royal Vopak, Money Market Loans as well as a risks, reference is made to notes 6.3 and 6.4 and 9.9.
Interest-bearing loans
Interest- bearing loans Total interest In EUR millions USPPs Asian PPs VTS bank loan RCFs Other Bank loans Total - lease liabilities bearing loans Non-current 1,123.2 164.0 – 100.0 7. 3 – 1,394.5 534.7 1,929.2 Current 180.0 – 66.2 39.7 – 178.0 463.9 30.2 494.1 Carrying amount at 31 December 2019 1,303.2 164.0 66.2 139.7 7. 3 178.0 1,858.4 564.9 2,423.3 Average remaining terms (in years) 4.5 21.0 0.7 2.6 3.1 – 5.2 26.6
Non-current 1,327.3 157.6 122.9 – 8.5 – 1,616.3 668.5 2,284.8 Current 121.3 – – 6.7 – 205.0 333.0 30.7 363.6 Carrying amount at 31-December 2020 1,448.6 157.6 122.9 6.7 8.5 205.0 1,949.3 699.2 2,648.5 Average remaining terms (in years) 5.8 20.0 2.6 2.5 1. 9 – 6.1 25.9
Required ratios Senior net debt : EBITDA (maximum) 3.75 3.75 3.75 3.75 3.75 3.75 Interest cover (minimum)1 3.50 3.50 3.50 3.50 3.50 3.50 1 Interest cover is the ratio of the EBITDA and the net finance costs.
The fair value of the interest-bearing loans is disclosed in note 9.9. amounts of cash and which are subject to an insignificant risk of changes in value, net of specific outstanding bank overdrafts when they are considered an integral part of the Group’s cash management. Change of control clauses For the years presented, there were no material short-term deposits positions outstanding per year-end. Certain lenders have the right to demand complete repayment of outstanding amounts in case any person or any group of persons acting together, other than HAL Holding N.V., acquires control, directly The reconciliation with the Consolidated Cash Flow Statement and the net debt reconciliation of indirectly, of more than 50% of the voting rights of the Koninklijke Vopak N.V. is as follows:
Cash and cash equivalents In EUR millions 31-Dec-20 31-Dec-19 Cash and cash equivalents 68.3 94.5 In EUR millions 31-Dec-20 31-Dec-19 Bank overdrafts - 9.3 - 6.5 Cash and bank 60.9 86.8 Total 59.0 88.0 Short-term deposits 7. 4 7. 7 Total 68.3 94.5 The cash and cash equivalents were at the free disposal of the Group for the years presented.
Cash and cash equivalents include all cash balances, short-term deposits and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 174
Note 5.6 Net finance costs Net finance costs
In EUR millions 2020 2019 Accounting policies General and specific borrowing costs, including the cost of hedging, that are directly attributable to the Interest income 5.9 6.4 acquisition or construction of a qualifying asset are capitalized during the period of time that is required Dividends received from other financial assets – 2.4 to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that Interest and dividend income 5.9 8.8 necessarily take a substantial period of time (> 1 year) to get ready for their intended use or sale. Other Interest expense on interest-bearing loans1 79.1 95.4 borrowing costs are expensed in the period in which they are incurred. Interest expense on lease liabilities 21.1 22.4 Capitalized interest - 18.5 - 28.0 Interest income from granted loans and dividends from other financial assets (over whose financial and Interest component of provisions 0.2 0.2 operating policies the Group has no significant influence) are presented under Interest and dividend Fair value movements of (part of) derivative financial instruments (no income. Interest income is calculated by applying the effective interest rate to the gross carrying amount hedge accounting) - 23.9 - 3.5 of a financial asset except for financial assets that subsequently become credit impaired. For credit Exchange differences on underlying items2 30.6 6.3 impaired financial assets, the effective interest rate is applied to the net carrying amount of the financial Other 3.6 1. 7 asset (after deduction of the loss allowance). Finance costs 92.2 94.5
Dividend income is recognized when the right to receive payment is established. All dividend income is Net finance costs 86.3 85.7 related to dividends from equity investments held at Fair value through Other comprehensive income 1 Interest expense includes the impact of interest rate derivatives that are part of a fair value hedge accounting (FVOCI). In prior years this dividend income was presented as part of the net finance costs, as per 2020 relationship and/or the recycling of results from the cash flow hedge reserve. this is presented as part of Other income as it relates to income from investments which are related to 2 Exchange differences on underlying items includes the impact of foreign currency derivatives that are part of a fair value hedge accounting relationship and/or the recycling of results from the cash flow hedge reserve. the core activities of the Group. Reference is als made to note 2.4.
Finance costs consist primarily of interest, fair value gains/losses on derivatives not in a hedge 2020 relationship and exchange differences on loans drawn and of results on hedging instruments recognized In 2020, the Group’s net finance costs amounted to EUR 86.3 million, which is in line with in the statement of income. Interest expenses are recognized in the period to which they relate, taking EUR 85.7 million in 2019. The decrease in the interest on interest-bearing loans of EUR 16.3 million into account the effective interest rate. mainly in connection with lower average net-debt compared to prior year, was to a large extent offset by lower capitalized interest of EUR 9.5 milion caused by commissioning of expansion projects at subsidiaries during the year.
In 2020, capitalized interest during construction was subject to an average interest rate of 3.3% (2019: 5.5%).
2019 The Group recognized a constructive obligation in 2017 in relation to the joint venture terminal Vopak SDIC Yangpu terminal in China, which was recognized under the provisions with a corresponding loss in the net finance expenses. This terminal was divested in December 2019, as a result the remaining amount of the historic constructive obligation was released to the income statement for the amount of EUR 1.8 million. This gain was classified as an exceptional item in 2019. For more information, reference is made to note 3.5.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 175 Section 6 Financial risk management
As a global player in the capital-intensive tank terminal industry, the Vopak Group is exposed to a number of financial risks inherent in the nature of its operations. This section comprises the disclosures on the Group’s financial risk management objectives and policies, as well as the Vopak Group's exposure to currency risk, interest rate risk, equity securities price risk, liquidity risk and credit risk together with the policies and procedures established to monitor and manage these risks.
In addition, a sensitivity analysis is also provided in this section detailing how these risks could affect the Group’s future financial performance.
The following notes are presented in this section: • 6.1 General • 6.2 Derivatives and hedge accounting • 6.3 Currency risk (market risk) • 6.4 Interest rate risk (market risk) • 6.5 Equity securities price risk (market risk) • 6.6 Credit risk • 6.7 Liquidity risk
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 176
Note 6.1 General
Overview of financial risk management by the Group The table below provides an overview of the financial risks to which the Group is exposed, where these financial risks are arising from and how these risks are measured and managed by the Group.
Note Risk Where is the risk exposure arising from How is the risk exposure measured How is the risk management by the Group 6.3 Currency risk • Recognized financial assets and liabilities • Sensitivity analysis Vopak hedges its foreign currency risk exposure resulting (market risk) denominated in a currency other than the • Cash flow forecasting from net interest-bearing functional currency of the entity concerned debt and intercompany positions in principle in full. • Future transactions This is primary done via forward exchange contracts and • Net investments in foreign operations cross-currency interest rate swaps (CCIRSs). • Of the total interest-bearing debt denominated in another currency than the functional currency concerned, 34% was hedged by means of cash flow hedges per year-end 2020. • Of the total net investments in foreign currencies held by the Group 61% was under a net investment hedge. • The remaining currency risk on the net interest-bearing debt and intercompany positions for which neither cash flow hedge accounting or net investment hedge accounting is applied, is hedged via currency derivatives. Since no hedge accounting is applied the gains and losses on the derivatives and the foreign currency gains and losses on the net interest-bearing debt are always recognized in the income statement in the same period, establishing the same effect as when hedge accounting would be applied.
6.4 Interest rate risk • Net interest bearing debt at variable interest rates • Sensitivity analysis Per year-end 2020, 83% of the total interest-bearing (market risk) • Fixed-to-floating ratio loans was financed at a fixed interest rate. For both years presented no use was made of Interest rate swaps (IRSs) and cross-currency interest rate swaps (CCIRSs) to hedge the interest rate risk.
6.5 Equity securities price risk • Investments in equity securities • Sensitivity analysis The group has a limited number of equity investments which (market risk) are measured at fair value through OCI. The total carrying value of these investments is EUR 36.5 million.
6.6 Credit risk (customer and counterparty) • Cash and cash equivalents • Aging analysis • Operational receivables: relatively short payment periods, • Trade and other receivables • Credit ratings combined with in many instances a retention right on • Finance lease receivables • Exposure per counterparty the stored product in connection with trade receivables. • Derivatives • Loans granted relate to financing of Vopak network • Loans granted companies (joint ventures and associates). • Committed credit facilities • Spreading of liquidity investments across a select group of high rated financial institutions limiting undue exposure to one financial institution. • During the years presented no material impairments were recognized on financial receivables.
6.7 Liquidity risk Net interest bearing debt, other (current) liabilities • Long-term scenario planning Diversified funding and availability of committed and off-balance sheet commitments • Cash flow forecasts and uncommitted credit facilities. (incl. annual budget cycle) • Amount of unused credit facilities At year-end 2020 the Group had unused committed credit facilities of EUR 1,054.7 million.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 177
Financial risk management Note 6.2 Derivatives and hedge accounting The Group is exposed to a number of financial risks inherent in its day-to-day operations. These risks are In order to control the risks attached to fluctuations in foreign currencies and interest rates, Vopak uses connected with the effects of movements in exchange rates and interest rates. The Group is also derivative financial instruments in accordance with a financial policy approved by the Executive Board. exposed to credit risk and liquidity risk. This financial policy is designed to control the effects of such risks on cash flows, equity and results. Speculative positions are not allowed. Financial risk management, except for customer credit risk and operational working capital management, is controlled by Global Treasury, the central treasury department, based on policies approved by the The main derivative financial instruments used by the Group are forward exchange contracts (Forwards), Executive Board. Global Treasury identifies the financial risks and discusses these, together with the interest rate swaps (IRSs) and cross-currency interest rate swaps (CCIRSs). related hedge proposals, in detail with the CFO. The Executive Board provides written principles for overall risk management as well as written policies covering specific areas such as foreign exchange risk, Hedge accounting is applied to remove the accounting mismatch between the hedging instrument and interest risk, counterparty credit risk, use of derivative financial instruments and non-derivative financial the hedged item. This will effectively result in recognizing interest expense at a fixed interest rate for the instruments, and investment of excess liquidity. Reports on risk and risk management are submitted on hedged loans, and removing the currency exposure from loans and receivables as well as purchases of a regular basis. property, plant and equipment at the fixed foreign currency rate for the hedged items.
Hedging alternatives are discussed by the Global Treasury and Global Control departments in close Accounting policies co-operation with the CFO prior to approval being requested from the Executive Board. Derivative financial instruments are recognized in the statement of financial position on the transaction date and measured at fair value. Changes in fair value are recognized in the statement of income unless In order to control the risks attached to fluctuations in foreign currencies and interest rates, Vopak uses hedge accounting is applied. With respect to hedge accounting, Vopak makes a distinction between fair derivative financial instruments in accordance with a currency risk management policy approved by the value hedges, cash flow hedges and hedges of net investments in foreign operations. Executive Board. This financial policy is designed to control the effects of such risks on cash flows, equity and results. Derivatives are used exclusively for hedging purposes and are not permitted to be Derivatives are only used for economic hedging purposes and not as speculative investments. However, used as trading or speculative instruments. where derivatives do not meet the hedging criteria, they are classified as ‘held for trading’ for accounting purposes. The areas involving the most significant financial risks are trade and other receivables, foreign currency exchange risk arising from future commercial transactions, recognized assets and liabilities and net At the inception of the hedging transaction, the Group formally designates and documents the economic investments in foreign operations, net finance costs resulting from fluctuations in market interest rates relationship between eligible hedging instruments and hedged items to which it will apply hedge and liquidity risks. accounting and the risk management objective and strategy for undertaking the hedge.
Detailed information on the specific risk exposures is included in the relevant disclosure notes The documentation includes identification of the hedging instrument, the hedged item, the nature of the in this section. risk being hedged and how the Group will assess whether the hedging relationship meets the hedge effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the The Group has not identified additional financial risk exposures in 2020 compared to the previous year. hedge ratio is determined). A hedging relationship qualifies for hedge accounting if it meets all of the The approach to capital management and financial risk management activities remained unchanged following effectiveness requirements: compared to prior year. Reference is also made to note 5.1. • There is ‘an economic relationship’ between the hedged item and the hedging instrument • The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship • The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the Group actually uses to hedge that quantity of hedged item.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 178
Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic The gain or loss as a result of ineffectiveness and the interest component that is a result of the time prospective effectiveness assessments, to ensure that an economic relationship exists between the value of money in the valuation of the derivative financial instrument are recognized directly in the hedged item and hedging instrument. statement of income. This also applies to the credit risks on derivatives, unless the cumulative change in the fair value of the hedging instrument is lower than the hedged item. Fair value hedges The Group normally only applies fair value hedge accounting for hedging fixed-interest risk on loans Amounts accumulated in equity are reclassified to profit or loss at the same date as the hedged drawn. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are transaction affects profit or loss or if the hedged transaction is no longer probable. The effects are shown recorded in the income statement, together with any changes in the fair value of the hedged item that under Finance costs. If the established agreement or the foreseeable transaction that is hedged results are attributable to the hedged risk. The gain or loss relating to the effective portion of the derivative is in the recognition of a non-financial asset, the accumulated gains or losses previously deferred in equity recognized in the income statement within Net finance costs, together with changes in the fair value of are reclassified from equity and recognized in the initial recognition of the asset or liability. the hedged fixed-rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognized in profit or loss within Finance cost. If a hedging instrument or the hedge relationship is terminated but the hedged transaction is still expected to take place, the accumulated gains or losses will remain in equity at that time and will For fair value hedges relating to items carried at amortized cost, any adjustment to carrying value is subsequently be recognized in the statement of income when the previously hedged amortized through the income statement over the remaining term of the hedge using the EIR method. transaction takes place. The EIR amortization may begin as soon as an adjustment exists and no later than when the hedged item ceases to be adjusted for changes in its fair value attributable to the risk being hedged. Net investment hedges Net investments in foreign operations can be hedged (net investment hedge) by qualifying and If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount designated derivative financial instruments or debt instruments denominated in foreign currency. of a hedged item for which the effective interest method is used is amortized to the income statement Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is over the period to maturity using a recalculated effective interest rate. accounted for as part of the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging instrument relating to the effective portion of the hedge are recognized Cash flow hedges in the translation reserve (equity component) via OCI to the extent that they relate to the hedging of net A cash flow hedge is applicable for those derivatives qualifying and designated as a hedge of the change investments in foreign activities. The gain or loss relating to the ineffective portion is recognized in cash flows to be received or paid relating to a recognized asset or liability or a highly probable immediately in the income statement. forecasted transaction. Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship Reversal through the statement of income takes place proportionally if all or part of the underlying exists between the hedged item and hedging instrument. The Group enters into hedge relationships position is sold. The ineffective part and the interest component are recognized directly in the where the critical terms of the hedging instrument match exactly with the terms of the hedged item, statement of income. and thus a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of the hedged item such that the critical terms no longer match exactly with the critical terms of Derivatives that do not qualify for hedge accounting the hedging instrument, the Group uses the dollar offset method to assess effectiveness. Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognized immediately in the The effective parts of changes in the fair value of derivative financial instruments are recognized in Other income statement and are included in the Finance costs. This mainly comprises derivatives that are used comprehensive income. Ineffectiveness on cash flow hedges is recognized where the cumulative to hedge the foreign currency risk on intra-group positions. Although the derivatives have not been change in the designated component value of the hedging instrument exceeds, on an absolute basis, designated in a hedge relationship, they act as an economic hedge and will offset the underlying the change in value of the hedged item attributable to the hedged risk. transactions when they occur.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 179
Reconciliation of derivative financial instruments Key accounting estimates and judgments The next table shows the effects of combining the currency derivative financial instruments The fair value of a derivative financial instrument not traded on active markets is measured as (see note 6.3) and the interest derivative financial instruments (see note 6.4) as well as the offsetting the present value of the expected future cash flows under the contract (level 2 fair value). In applied on the individual contractual positions and a reconciliation to the Consolidated statement of determining this value, a valuation model is used that is based on the interest rates and the financial position. exchange rates as at the end of the reporting period. Reference is made to note 9.9 for more information.
31 December 2020 31 December 2019
In EUR millions Note Assets Liabilities Total Assets Liabilities Total Currency derivative financial instruments 6.3 14.2 26.0 - 11.8 61.4 51.8 9.6 Total derivative financial instruments 14.2 26.0 - 11.8 61.4 51.8 9.6 Offsetting – – – - 13.5 - 13.5 – Total 14.2 26.0 - 11.8 47.9 38.3 9.6
Non-current 9.1 5.4 3.7 19.4 – 19.4 Current 5.1 20.6 - 15.5 28.5 38.3 - 9.8 Total 14.2 26.0 - 11.8 47.9 38.3 9.6
The table below shows the movements in the Group's total derivative portfolio for the year.
In EUR millions Note Forwards Swaps Total 31 December 2019 43.3 - 33.7 9.6 Settlement of derivatives 2.9 - 61.6 5.1 - 56.5 Effective part of hedges of net investments to other comprehensive income 5.2 7. 5 – 7. 5 Effective part of cash flow hedges to other comprehensive Income 5.2 – 3.7 3.7 Fair value movement of derivatives not in a hedge relationship 5.6 23.9 – 23.9 31-December 2020 13.1 - 24.9 - 11.8
For an overview of the movements in the hedging reserve in shareholders’ equity, reference is made to note 5.2.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 180
Note 6.3 Currency risk Intra-group financing The Group is exposed to foreign currency exchange risks. These arise mainly from the US dollar (USD) All intra-group long-term financing is provided by Vopak's Global Treasury function which acts as an and Singapore dollar (SGD). Foreign currency exchange risk arises from future commercial transactions, in-house bank. In principle, all intra-group financing is denominated in the functional currency of the local recognized assets and liabilities and net investments in foreign operations. entity concerned. This set-up exposes the Vopak Group to foreign currency risk for long-term intra-group positions which are not part of a net-investment. Following the Group’s currency risk management policy The primary objective of the currency risk management policy is to protect Vopak against fluctuations in this currency risk is fully hedged by means of derivatives where possible. The derivatives used to hedge the value of the assets, liabilities and expected cash flows caused by changes in currency exchange these positions are not included in a hedge relationship and as a result movements in the fair value of rates. Account is taken of future cash flows from investments and disposals as well as cash flows from these derivatives are directly recognized in the income statement. The timing of these fair value operating and financing activities. Each quarter, currency risks are identified and the hedging strategy is movements coincides with the timing of the recognition of the foreign currency gains/losses on the reviewed and subsequently presented to the Executive Board for approval. The main derivative financial intra-group loans and receivables denominated in a currency other than the Euro, which are instruments used by the Group to hedge currency risks are forward exchange contracts and cross- effectively offset. currency interest rate swaps (CCIRSs). Currency risk arising from the investments in foreign operations The table below provides an overview of the contractual currencies of the interest-bearing loans and Net investment in foreign activities are hedged by loans in the same currency and/or forward exchange short-term borrowings (excluding transaction costs): contracts, while applying net investment hedge accounting. The amount of the hedge is determined mainly by limiting the maximum net exposure per currency taking into account a maximum impact on Local currency Euro the total net investment position.
In millions 2020 2019 2020 2019 Currency risk arising from net-debt position Euro (EUR) 355.8 304.0 355.8 304.0 Due to the Private Placements and other net-debt items in foreign currency, the Group is exposed to US dollar (USD) 1,534.4 1,369.7 1,247.7 1,223.0 currency risk. It is the Group's policy to hedge this exposure to leave the Group with no material risks by Pound sterling (GBP) 35.0 35.0 38.8 41.0 making use of foreign currency contracts, cross-currency swaps and natural hedges Canadian dollar (CAD) 25.0 25.0 15.9 1 7. 1 (net investment hedges). All currency hedges for the years presented were highly effective. Singapore dollar (SGD) 211.0 160.0 129.6 105.9 Japanese yen (JPY) 20,000.0 20,000.0 157.6 164.0 Currency risk arising from lease liabilities India Rupee (INR) 500.0 500.0 5.6 6.3 The Group is also exposed to currency risk related to lease liabilities in the limited instances where the Vietnam dong (VND) 60,000.0 – 2.1 – contract currency is different from the functional currency of the entity concerned. This primarily Total 1,953.1 1,861.3 concerns joint ventures and associates and not subsidiaries. These currency risks are normally not hedged. Currency risk arising from operating activities The risks associated with commercial transaction positions arising from operating activities are limited for Vopak, as operating income and operating expenses are, as a rule, largely denominated in the same currency. However, in some countries (in particular, in Latin America), a substantial portion of the income flow is in US dollars whereas the operating expenses are largely denominated in local currencies. In these countries, the aim is to hedge the transaction risk naturally. Any material remaining net transaction position can be hedged in full by means of forward exchange contracts.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 181
The effects of the foreign currency related hedging instruments on the Group’s financial position and financial results are shown in the table below:
Carrying amount Ineffectiveness Change in value of recognized in In EUR millions Maturity Assets1 Liabilities1 Notional amount Hedge ratio hedged item income statement4
31 December 2019 Forward foreign currency contracts2 < 1 year 0.1 0.2 142.4 100% Total net investment hedges 0.1 0.2 142.4 100% - 4.5 –
Cross-currency interest rate swaps3 < 1 year 29.0 24.9 209.2 100% Cross-currency interest rate swaps3 1-5 years 31.8 12.3 209.6 100% Total cash flow hedges 60.8 37.2 418.8 100% 10.2 3.3
Forward foreign currency contracts < 1 year 0.5 14.4 787.8 n/a Total derivatives no hedge accounting 0.5 14.4 787.8 n/a n/a n/a
Total derivative financial instruments 61.4 51.8 1,349.0 100% 5.7 3.3
31 December 2020 Forward foreign currency contracts2 < 1 year 1. 4 – 137.4 100% Total net investment hedges 1.4 – 137.4 100% 7. 5 –
Cross-currency interest rate swaps3 1-5 years 9.1 – 307.3 100% Cross-currency interest rate swaps3 > 5 years – 5.4 66.6 100% Total cash flow hedges 9.1 5.4 373.9 100% 3.7 0.4
Forward foreign currency contracts < 1 year 3.7 20.6 940.8 n/a Total derivatives no hedge accounting 3.7 20.6 940.8 n/a n/a n/a
Total derivative financial instruments4 14.2 26.0 1,452.1 100% 11.2 0.4 1 At fair value. 2 Foreign currency forwards accounted for as hedges on net investments. 3 Cross currency interest swaps accounted for as cash flow hedges are used to hedge currency (2020: USD 468 million; 2019: USD 486 million and JPY 5 billion) on fixed debt denominated in foreign currency. 4 This is the ineffectiveness resulting from the FX as well as the interest part of the hedge.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 182
Of the total amount of interest-bearings debt denominated in a foreign currency per year-end 2020, Sensitivity of exchange rate changes of financial instruments on net profit and equity 100% (2019: 100%) was hedged via derivatives for which either cash flow hedge accounting, net The value of debt and hedging instruments denominated in currencies other than the functional currency investment hedge accounting or no hedge accounting was applied. At year-end 2020, 34% of the entities holding them is subject to exchange rate movements. The sensitivity analysis for the main (2019: 41%) of the currency risk was hedged via cash flow hedges. currencies and their positions at 31 December 2020 and 31 December 2019 shows how changes in exchange rates by 10% affect net profit and equity, while taking into account the effect of the use of The total nominal amount of net investments (hedged items) included in a net investment hedge derivatives and the hedge accounting applied. relationship amounted to EUR 955.5 million as at year-end 2020 (2019: EUR 799.0 million). Of this amount EUR 819.2 million (2019: EUR 656.2 million) was hedged via foreign currency interest-bearing Depreciation1 Appreciation1 debt and EUR 136.3 million (2019: EUR 142.9 million) via derivatives. Also taking into account the In EUR millions Net profit Equity Net profit Equity investment in EUR entities, the total unhedged position amounted to EUR 1,110.0 million or 38% (2019: EUR 1,267.1 million or 42%). 31 December 2019 USD - 0.9 - 24.9 1. 1 30.5 Reference is made to note 6.2 for a reconciliation between the amounts presented in the table above SGD 0.4 - 25.6 - 0.5 31.2 and the amounts recognized in the Consolidated Statement of Financial Position. CNY - 0.1 - 24.7 0.1 30.2 BRL – - 8.9 0.1 10.9 For all cash flow hedges related to currency and interest rate risk, a loss of EUR 115.1 million, net of tax JPY – - 3.7 – 4.5 was recognized in equity via OCI up to 31 December 2020 (2019: loss of EUR 117.2 million) (see note 5.2). Total effect - 0.6 - 87.8 0.8 107.3
Currency translation risk 31 December 2020 Furthermore, a foreign currency translation risk results from investments in foreign operations of which USD - 1.7 - 12.2 2.1 14.7 the net assets are exposed to foreign currency translation risk. The Group result is also impacted by SGD - 1.0 - 25.5 1. 2 31.2 translating the results of these foreign currency operations. This non-economic currency risk is caused CNY - 0.4 - 26.5 0.5 32.3 by the accounting conventions applied for translating the net assets and results of foreign operations to BRL - 0.3 - 6.9 0.3 8.4 the presentation currency of the Group, which is the euro. For more information, reference is JPY – – – – made to note 2.8. Total effect - 3.4 - 71.1 4.1 86.6 1 Foreign currency against the euro.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 183
Note 6.4 Interest rate risk Sensitivity to changes in market interest rates Vopak's policy on interest rate risks aims to control the interest expenses resulting from fluctuations in The sensitivity analysis shows how changes in market interest rates affect net profit and equity, while the financial market interest rates, to protect the projected gross result of Vopak and taking into account taking into account the effects of the derivatives and the hedge accounting applied and assuming that all the long-term profile of the company. Fixed-rate debt exposes the Group to fair value risk. Floating-rate other variables remain constant. Due to the volatility of market interest rates, Vopak has used a fixed debt exposes the Group to cash flow risk. The specification of the total interest-bearing loans is percentage of 25% as a reasonable change at year-end 2020 and year-end 2019. disclosed in note 5.5. It is Vopak's long-term policy to manage its interest exposure to an acceptable level of fixed/floating to optimize net finance expenses and reduce volatility on the net result within the Increase 25% Decrease 25% bandwidth of the interest related financial covenants. Closing level 1 1 Interest rate swaps may be used in order to minimize the interest rate risks associated with the In EUR millions 3-month Net profit Equity Net profit Equity financing of the Group and at the same time optimize the net interest costs. Interest rate risks are 31 December 2019 identified and possible hedges considered when obtaining or providing new financing. EUR -0.38% - 0.3 2.8 - 0.3 - 2.8 USD 1.91% – 2.7 – - 2.9 There were no interest rate derivatives present in the years presented. SGD 1.54% 0.1 0.8 - 0.1 - 0.8 JPY -0.05% – - 0.7 – 0.7 As at 31 December 2020, taking into account the interest rate swaps, 83% (2019: 83%) of the total Total effect - 0.2 5.6 - 0.4 - 5.8 interest-bearing loans and bank loans of EUR 1,949.3 million (2019: EUR 1,858.4 million) was financed at a fixed interest rate with remaining terms of up to 19 years (2019: 20 years). 31-December 2020 EUR -0.55% 0.1 3.4 - 0.1 - 3.5 The average fixed interest and the average floating interest on the interest-bearing loans and bank loans USD 0.24% – 0.5 – - 0.6 at 31 December 2020 were 3.9% (2019: 4.3%) and 1.4% (2019: 1.4%) respectively. The following SGD 0.20% - 0.4 0.1 0.4 - 0.1 statement provides insight into the interest repricing calendar for the interest-bearing loans and the JPY -0.08% – – – – bank loans at the statement of the financial position date, while taking into account the effects of the Total effect - 0.3 4.0 0.3 - 4.2 derivatives that may be present and the hedge accounting applied. All interest-bearing loans with a 1 Revaluation reserve derivatives through Other comprehensive income. floating interest rate are re-priced within one year.
31 December 2020 31 December 2019
In EUR millions Floating Fixed Total Floating Fixed Total < 1 year - 211.8 - 121.2 - 333.0 - 217.7 - 246.2 - 463.9 1-2 years – - 2.0 - 2.0 – - 134.2 - 134.2 2-3 years - 128.4 - 244.2 - 372.6 – 0.4 0.4 3-4 years – - 187.4 - 187.4 - 106.3 - 269.7 - 376.0 4-5 years – - 236.6 - 236.6 – - 163.2 - 163.2 > 5 years – - 817.7 - 817.7 – - 721.5 - 721.5 Total - 340.2 - 1,609.1 - 1,949.3 - 324.0 - 1,534.4 - 1,858.4
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 184
Note 6.5 Equity securities price risk Note 6.6 Credit risk Credit risk arises when a customer or other counterparty of a financial instrument fails to discharge its Accounting policies contractual obligation. Equity investments that are not classified as a subsidiary, joint venture or associate are measured at fair value (level 3). Gains and losses on these investments will either be recorded in the Income statement Vopak's credit risk arises primarily from loans granted, trade and other receivables, cash and cash or Other comprehensive income, depending on whether the Group has made an irrevocable election at equivalents, and derivative financial instruments. Vopak's maximum exposure to credit risks is the the time of initial recognition to account for the equity investment at fair value through other carrying amount of these financial assets, amounting to EUR 449.6 million (2019: EUR 525.2 million), comprehensive income. The fair value is based on the discounted cash flow approach or recent and the credit replacing guarantees amounting to EUR 80.8 million (2019: EUR 87.1 million). Of this market transaction. amount, nil was recognized in the statement of financial position at year-end 2020 (2019: nil). Furthermore, the COVID-19 pandemic had no material effect on the credit risk exposure of the financial Where the Group has elected to present fair value gains and losses on equity investments in OCI, there instruments in an asset position. is no subsequent reclassification of fair value gains and losses to the income statement following the divestment of equity investment. Dividends from equity investments are recognized in the income A loan of EUR 54.8 million was granted to a joint ventures in the Asia and Middle East division at statement as dividend income, which is classified as Other income, when the Group’s right to receive yearend 2020 (2019: EUR 54.9 million). For more information, reference is made to note 9.2. No other payments is established. loans were granted to joint ventures and associates at year-end 2020. Loans to other third parties are generally secured, and mainly relate to loans to non-controlling shareholders. The Group has 12 equity investments (2019: four) for a total amount of EUR 36.5 million at year-end 2020 (2019: EUR 30.1 million), of which the investment in SabTank (Saudi Arabia) is the largest. Our 100% For more information on the credit risk of the trade receivables, reference is made to note 4.2. investment in Venezuela is also classified as an equity investment. The other equity investments are investments held by Vopak Ventures B.V. The Group elected to measure all investments at fair value Risk management through Other comprehensive income as these entities are part of the Vopak network, provide storage The credit risk with regard to trade receivables and lease receivables from customers is limited as the and handling (related services) and are not held for trading. value of the product stored for these clients usually exceeds the value of the receivables and Vopak generally has the right of retention although other claims may have priority ranking over the right of Deconsolidation of Vopak Venezuela: retention in a bankruptcy case. Vopak constantly monitors the outstanding receivables and the value of In 2018, Vopak deconsolidated its wholly-owned terminal in Venezuela (Americas division), reflecting the the stored products. See note 4.2 for further details. conclusion that the Group no longer had control from an accounting perspective. It was observed that the economic, legal, social and political environment in which the terminal operates was continuously Vopak has spread its cash and cash equivalents and other liquidity investments across a select group of deteriorating. Strict currency controls continued to be applicable and inflation exceeded one million high rated financial institutions while daily limiting the cash and cash equivalents within the Group and percent in 2018. assessing the exposure to each financial institution. Vopak applies credit limits per institution, depending on their credit ratings and credit default swap spread, and regularly reviews these limits. These treasury Vopak continues to monitor the situation and will periodically assess whether facts and circumstances activities are concluded with financial institutions that have at least an A- Standard & Poor's credit have changed and whether control has been regained over the entity in Venezuela. Vopak remains the rating. At 31 December 2020, the maximum risk in the event of the default of a single financial 100% shareholder in the entity and continues to operate the company in line with Vopak’s standards. institution amounted to EUR 17.0 million (2019: EUR 19.0 million).
For more information on the equity investments, other than investments in subsidiaries, joint ventures The derivative financial instruments will be settled on a gross basis. The credit risk of derivative financial and associates, reference is made to note 9.6. instruments with a positive value is mitigated by ISDA Master Agreements with counterparties, which have the option to settle all gross amounts on a net basis in the event of a default of the counterparty, and by setting qualitative and financial limits for the derivative counterparties. The Group maintains a control system that includes the authorization, reporting and monitoring of derivative activities including the Credit Default Swaps developments of counterparties observed on the secondary market. Vopak
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 185
believes there are no material credit risks related to derivatives in the Group's financial position. 31 December 2020 31 December 2019 At year-end 2020, the derivatives with a counterparty credit risk amounted to Total Total EUR 3.9 million (2019: EUR 17.2 million). In EUR millions facility1 Used Unused facility1 Used Unused Royal Vopak - Revolving credit facility 1,000.0 – 1,000.0 1,000.0 100.0 900.0 Assessing the financial positions of customers and other counterparties is part of the Group's credit risk VTS - Revolving credit facility 61.4 6.7 54.7 66.2 39.7 26.5 management and tendering process; however, this cannot exclude all credit risk. Total committed facilities 1,061.4 6.7 1,054.7 1,066.2 139.7 926.5
Note 6.7 Liquidity risk Royal Vopak - Bank loan facilities 405.0 205.0 200.0 330.0 178.0 152.0 The primary objective of liquidity management is providing sufficient cash and cash equivalents at all Total uncommitted facilities 405.0 205.0 200.0 330.0 178.0 152.0 times to enable Vopak to meet its payment obligations. Total facilities 1,466.4 211.7 1,254.7 1,396.2 317.7 1,078.5 1 At nominal value. Cash management The liquidity requirements are monitored continuously and funding is planned in such a way as to avoid On 1 June 2018, Vopak reached agreement with all 15 lenders of the EUR 1 billion senior unsecured excessive short-term financing needs. The long-term liquidity risk is assessed prior to every major multicurrency revolving credit facility regarding a second extension of the facility. The maturity date has investment obligation. Active cash management is a daily responsibility and the liquidity requirements been extended until 1 June 2023. This facility was not utilized at year-end 2020 (2019: EUR 100 million). are identified each quarter based on thorough scenario planning. Surplus cash is invested, if available, in interest-bearing current accounts and deposit accounts. At 31 December 2020, the Group also had unused lines of credit of EUR 200.0 million (2019: EUR 152.0 million) that are available to meet short-term liquidity needs. The Group can be Vopak's Global Treasury function acts as an in-house bank that allocates funds internally, which are raised requested to repay these short-term loans on demand. There are no significant restrictions on the use of centrally within the Group. Surplus cash held by the operating entities over and above balances required these facilities. for working capital management is transferred to Global Treasury and operating companies are normally funded by a combination of equity and inter-company loans. Exceptions to this are the bank loan of Maturity analysis EUR 122.9 million (SGD 200 million), drawdowns under the revolving credit facilities of EUR 6.7 million The graph below provides an overview of the repayment profile of the Group's interest-bearing loans (SGD 11 million) of Vopak Terminals Singapore Pte. Ltd., the bank loan of EUR 2.1 million (VND 60 billion) (excluding lease liabilities) based on the contractual undiscounted cash flows. For the maturity overview of Vopak Vietnam and the bank loan of EUR 5.6 million (INR 500 million) of our terminal in India which of the lease liabilities, reference is made to note 3.4. have been raised locally. pa a Joint ventures and associates, where possible, are normally funded optimally with external debt on a 00 non-recourse basis for Vopak, taking into account local circumstances and contractual obligations. Reference is made to note 9.8 for more information with regard to commitments and guarantees 00 provided to joint ventures and associates. 200 Available credit facilities At year-end 2020, the company had two revolving credit facilities (RCFs) which provide flexibility to 00 finance Vopak´s long-term growth strategy.
202 2022 202 202 202 202 202 202 202 20 0 20 2 20 20 0
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 186
The table below analyzes the Group's non-derivative financial liabilities and net-settled derivative financial also analyzes the maturity profile of financial assets in order to provide a complete overview of the liabilities into relevant maturity categories based on the remaining period at the end of the reporting contractual commitments and liquidity. The amounts disclosed in the table are the contractual period to the contractual maturity date. Derivative financial instruments are included in the analysis if undiscounted cash flows. The financial guarantees and securities issued (see note 9.8) are included for their contractual maturities are essential for an understanding of the timing of the cash flows. The table their full amount and it is assumed for disclosure purposes that these can be called within one year.
< 1 year 1-2 years 2-5 years > 5 years
In EUR millions - at 31 December 2020 2019 2020 2019 2020 2019 2020 2019 Cash and cash equivalents 68.3 94.5 – – – – – – Trade and other receivables 276.1 296.1 – – – – – – Loans to joint ventures and associates 54.8 54.9 – – – – – – Other loans – – – – – – 36.2 31.8 Finance lease receivable 5.2 5.0 5.3 5.2 22.5 22.0 47.0 57.7 Total undiscounted financial assets (excluding gross settled derivatives) 404.4 450.5 5.3 5.2 22.5 22.0 83.2 89.5
Bank overdrafts 9.3 6.5 – – – – – – Redemption of interest-bearing loans 128.8 287.2 2.8 135.0 797.9 539.6 818.6 721.5 Short-term borrowings 205.0 178.0 – – – – – – Lease liabilities 51.7 43.4 51.1 44.1 135.8 154.2 824.5 689.5 Interest payments 66.2 62.7 58.8 55.3 133.2 128.1 150.4 120.8 Interest rate swaps 2.5 1.4 2.5 1.7 4.6 2.5 1.5 – Trade and other creditors (excluding non-financial instruments) 206.0 175.2 – – – – – – Total undiscounted financial liabilities (excluding gross settled derivatives) 669.5 754.4 115.2 236.1 1,071.5 824.4 1,795.0 1,531.8
Derivative financial instruments outflow – - 209.2 – – - 307.3 - 209.6 - 66.6 – Derivative financial instruments inflow – 233.7 – – 317.0 241.3 63.4 – Total undiscounted gross settled derivatives – 24.5 – – 9.7 31.7 - 3.2 –
Financial guarantees and securities issued 117.9 133.9 – – – – – – Total financial guarantees and securities 117.9 133.9 – – – – – – Total -383.0 - 413.3 -109.9 - 230.9 -1,039.3 - 770.7 -1,715.0 - 1,442.3
Vopak Annual Report 2020 Consolidated Financial Statements
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 187
Section 7 Governance Accounting policies Share-based compensation This section comprises notes related to the Governance of the company, including Board Remuneration, The fair value of equity-settled share-based compensation plans is determined at the date of granting External Auditor fees and transactions with related parties. and expensed in the statement of income based on the Group’s estimate of the shares that will eventually vest over the period in which the service is rendered (vesting period) with a corresponding The following notes are presented in this section: adjustment directly in equity. The fair value of cash-settled share-based compensation plans is • 7.1 Remuneration of Board members determined at the date of granting and is remeasured at each reporting date until the liability is settled • 7.2 Long-term incentive plans (LTIPs) and is recognized over the vesting period as an expense to the extent to which participants have • 7.3 Related parties rendered services to date. • 7.4 Fees paid to auditors appointed at the Annual General Meeting Generally, the compensation cost is recognized on a straight-line basis over the vesting period. The Note 7.1 Remuneration of Board members amounts expensed are adjusted over the vesting period for changes in the estimate of the number of Reference is made to the section of the Remuneration report for information regarding the remuneration shares and the equivalent in cash that will eventually vest. Adjustments are made at the end of each and related costs of the Supervisory Board members and the Executive Board members. reporting period to reflect expected and actual forfeitures during the vesting period due to the failure to satisfy service conditions or non-market performance conditions, such as profitability growth targets and Note 7.2 Long-term incentive plans (LTIPs) remaining an employee of the Group over a specified time period. At year-end 2020, as in prior year, the Group operated three Long-Term Share Plans (LTSPs) and Long-Term Cash Plans (LTCPs). An equity-settled share-based payment award with a net settlement feature for withholding tax obligations is treated as equity-settled in its entirety. For the Executive Board, all share-based payment plans are 100% equity-settled. As an exception, the LTSP 2017-2019 was amended into fully cash-settled for the former Executive Board member Other long-term remuneration Jack de Kreij in accordance with the plan rules, following his decision and announcement to step Long-term remuneration settled in cash that depends on the development of the earnings per ordinary down early 2018. share (EPS) during a period of three years is allocated to these years based on the latest estimates of the EPS and are not treated as share-based payment plans. Liabilities are remeasured at the end of each For eligible senior management, the LTSPs also consisted of equity-settled share-based reporting period. compensation plans.
The LTCPs are other long-term remuneration plans settled in cash. LTCPs are granted to staff in countries where local legal, regulatory and/ or tax regulations and requirements make it administratively very complex and burdensome to provide shares of a foreign based company to local staff, or in countries where this is simply not allowed. The periods to which the plans relate are presented below: • LTSP and LTCP 2018-2020 • LTSP and LTCP 2019-2021 • LTSP and LTCP 2020-2022
The LTSP and LTCP 2017-2019 were vested and settled during 2020.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 188
Costs of long-term incentive plans
LTSP 2020 LTSP 2019 LTSP 2018 LTSP 2017 LTSP 2017 In EUR thousands equity-settled equity-settled equity-settled equity-settled cash-settled Cash Plan Total 2020 Total 2019 E.M. Hoekstra 272.3 216.5 176.8 69.3 n/a n/a 734.9 1,051.6 F. Eulderink 169.8 134.9 113.2 43.9 n/a n/a 461.8 663.7 G.B. Paulides 165.2 125.2 102.6 n/a n/a n/a 393.0 345.4 Members Executive Board 607.3 476.6 392.6 113.2 – n/a 1,589.7 2,060.7 J.P. de Kreij (retired) n/a n/a n/a n/a 37.9 n/a 37.9 360.5 Former members Executive Board n/a n/a n/a n/a 37.9 n/a 37.9 360.5 Other 1,265.7 790.7 592.4 222.2 10.1 402.3 3,283.4 6,410.0 Total 1,873.0 1,267.3 985.0 335.4 48.0 402.3 4,911.0 8,831.2 1 The total carrying amount of liabilities for cash-settled share-based payment at 31 December 2020 was EUR 0.0 million (31 December 2019: EUR 0.7 million).
Gerard Paulides was appointed as Chief Financial Officer and member of the Executive Board for a Long-Term Cash Plans period of four years, effective 1 February 2018. Mr. Paulides did not participate in the LTSP 2017-2019, For other senior managers who are not eligible to participate under the LTSP but who contribute that was settled in 2020. significantly to the company´s shareholder value, three-year Cash Plans have been granted. The LTCPs provide for additional pay in the form of deferred compensation under the terms and conditions of the For more information on the remuneration policy and the remuneration of the Executive Board members plan after the vesting period. The financial performance is measured by the EPS development during the and the Supervisory Board members, reference is made to the Remuneration report as included in the three-year performance period, the incentive can rise from 0% to a maximum of 22.5% or 30.0% per Governance and compliance chapter. annum of the salary at the grant date.
Long-Term Share Plans The current LTSPs reward participants for the increase in Vopak’s Earnings per Share (EPS) performance during the three-year performance period, respectively from start date of the plan to the end date of the plan (either 2018-2020, 2019-2021 or 2020-2022), at pre-set EPS targets. If a considerable, ambitious improvement in the EPS has been achieved during the three-year performance period, a long-term remuneration will be awarded based on a percentage of their annual salaries at date of grant for all plans that are active.
The incentive ranges that apply to the various plans for the different groups of participants are presented in the following table.
Incentive opportunities LTSP 2020 LTSP 2019 LTSP 2018 E.M. Hoekstra 0% to 165% 0% to 150% 0% to 150% F. Eulderink 0% to 135% 0% to 120% 0% to 120% G.B. Paulides 0% to 135% 0% to 120% 0% to 120% Eligible senior management 0% to 60% / 0% to 60% / 0% to 60% / 0% to 45% 0% to 45% 0% to 45%
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 189
Movements in the number of conditional awards
In numbers E.M. Hoekstra F. Eulderink G.B. Paulides J.P. de Kreij (retired) Other Total Outstanding at 31 December 2018 46,703 29,625 10,183 18,936 175,950 281,397 Vested - 14,932 - 9,291 – - 9,614 - 57,708 - 91,545 Change in expected average salary1 419 178 – – – 597 Forfeited – – – – - 9,376 - 9,376 Newly awarded 17,380 10,826 10,052 – 58,650 96,908 Outstanding at 31 December 2019 49,570 31,338 20,235 9,322 167,516 277,981 Vested and settled - 14,636 - 9,277 – - 9,322 - 48,925 - 82,160 Forfeited – – – – - 459 - 459 Newly awarded 16,643 10,375 10,097 – 82,661 119,776 Outstanding at 31 December 2020 51,577 32,436 30,332 – 200,793 315,138 1 For LTSP 2018, 2019 and 2020, the conditional awards are based on the salary on the date of grant.
Valuation and cost allocation Long-term incentive plans (LTIPs) valuation (former) Executive Board members and other senior executives
Conditional awards1 Number of expected shares2 Allocated cost to3
In EUR thousands Number Value at grant Number Value at vesting Value for cost allocation 2020 2019 LTSP 2020, equity-settled (conditional) 16,643 803.4 18,807 n/a 907.8 272.3 – LTSP 2019, equity-settled (conditional) 17,380 721.8 21,725 n/a 902.2 216.5 324.8 LTSP 2018, equity-settled (conditional) 17,554 701.7 15,799 679.2 631.5 176.8 271.5 Total outstanding LTIPs - E.M. Hoekstra 51,577 2,226.9 56,331 679.2 2.441.5 LTSP 2017, equity-settled (settled)1 14,636 577.3 17,563 908.4 692.8 69.3 455.3 Total LTIP cost - E.M. Hoekstra 734.9 1,051.6
LTSP 2020, equity-settled (conditional) 10,375 500.8 11,724 n/a 565.9 169.8 – LTSP 2019, equity-settled (conditional) 10,826 449.6 13,533 n/a 562.0 134.9 202.3 LTSP 2018, equity-settled (conditional) 11,235 449.1 10,111 434.7 404.1 113.2 173.8 Total outstanding LTIPs - F. Eulderink 32,436 1,399.5 35,368 434.7 1,532.0 LTSP 2017, equity-settled (settled)1 9,277 365.9 11,132 575.7 439.1 43.9 287.6 Total LTIP cost - F. Eulderink 461.8 663.7
LTSP 2020, equity-settled (conditional) 10,097 487.4 11,410 n/a 550.8 165.2 – LTSP 2019, equity-settled (conditional) 10,052 417.5 12,565 n/a 521.8 125.2 187.9 LTSP 2018, equity-settled (conditional) 10,183 407.0 9,165 394.0 366.3 102.6 157.5 Total outstanding LTIPs - G.B. Paulides 30,332 1,311.9 33,140 394.0 1,438.9 – – Total LTIP cost - G.B. Paulides 393.0 345.4
Total outstanding LTIPs - Members Executive Board 114,345 4,938.3 124,839 1,507.9 5,412.4 – – Total LTIP cost - Members Executive Board 1,589.7 2,060.7 > continued Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 190
Conditional awards1 Number of expected shares2 Allocated cost to3
In EUR thousands Number Value at grant Number Value at vesting Value for cost allocation 2020 2019 LTSP 2017, cash-settled (settled)1,4 9,322 367.7 11,186 578.5 578.5 37.9 360.5 Total LTIP cost - J.P. de Kreij (retired) 37.9 360.5
Total LTIP cost - (former) members Executive Board 1,627.6 2,421.2
LTSP 2020, equity-settled (conditional) 82,202 3,816.6 92,889 n/a 4,312.8 1,265.7 – LTSP 2019, equity-settled (conditional) 58,650 2,442.2 73,315 n/a 3,052.8 790.7 1,089.8 LTSP 2018, equity-settled (conditional) 59,941 2,303.3 53,949 2,319.3 2,073.0 592.4 869.9 Total outstanding LTIPs - Other senior executives 200,793 8,562.1 220,153 2,319.3 9,438.6 LTSP 2017, equity-settled (settled) 46,431 1,851.6 55,717 2,692.8 2,221.9 222.2 1,414.9 LTSP 2017, cash-settled (settled) 2,494 99.5 2,992 154.7 154.7 10.1 96.4 LTSP 2016, equity-settled (settled) 27,714 1,170.1 13,856 549.8 585.0 – 0.7 LTSP 2016, cash-settled (settled) 29,994 1,266.3 15,121 600.0 600.0 – 0.6 Total LTIP cost - Other senior executives 2,881.1 3,472.3
Total outstanding LTIPs and total LTIP cost 315,138 13,500.4 344,992 3,827.2 14,851.0 4,508.7 5,893.5 1 On a target level of 100%. For the LTSP 2017 of the Executive Board, the conditional awards are based on the average salary over the vesting period since date of appointment. For LTSPs 2018, 2019 and 2020 of the Executive Board, the conditional awards are based on the salary on the date of grant. The value at grant is the conditional number of shares multiplied by the average share price at the grant date. 2 The value for cost allocation for the equity-settled LTSPs is based on the number of expected or vested shares and multiplied by the fair value per share award at the grant date, which has been reduced with the expected discounted future dividends payable during the respective vesting periods since the holders of shares are not entitled to receive dividends during the vesting period. The value for cost allocation for the cash-settled LTSPs is based on the number of expected or vested shares and multiplied by the fair value per award at the reporting date less discounted expected future dividend payments. Expected dividends have been applied in accordance with the dividend policy of the company. The estimated vesting percentages of the LTSPs are based on a Monte Carlo simulation scenario analysis. 3 The (fair) value of the employee services received in exchange for the awards is recognized rateably over the vesting period of the plan. 4 On 15 November 2016, Mr. de Kreij, Chief Financial Officer and Vice Chairman of the Executive Board has informed the Supervisory Board that he has decided to step down as per 1 February 2018. The recognition of the LTSP 2016 and 2017 was amended into fully cash settled for Mr De Kreij in accordance with the plan rules, due to his announced resignation early in 2018. The costs of the LTSP were allocated to the remaining period of service.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 191
Note 7.3 Related parties In connection with the share buyback program, HAL Holding N.V. proportionally sold part of its shareholding in Vopak in order to maintain its interest at the same level. Vopak instructed an independent Transactions with Supervisory Board members and Executive Board members intermediary to match the open market trades under the share buyback program by purchasing on For the remuneration of Supervisory Board members and Executive Board members, the key Vopak’s behalf shares from HAL Holding N.V., at the same average price per share as the open market management of the Group, reference is made to the sections Remuneration of the Supervisory Board in trades, in proportion to its shareholding. The size of the buyback program of EUR 100 million included 2020 and Executive Board Remuneration in 2020 of the Remuneration report, which are deemed part of the shares that were bought from HAL Holding N.V. these financial statements. Transactions with pension funds No loans, advances or guarantees have been provided to current or former members of the Related party transactions with Vopak’s pension funds are presented in note 9.4. Supervisory Board and the Executive Board. Note 7.4 Fees paid to auditors appointed For both years presented, the Group has not conducted any transactions with companies in which at the Annual General Meeting Executive Board members and/or persons closely related to them have a significant financial interest. The fees listed in the table below relate to the procedures applied to the company and its consolidated Group entities by Deloitte Accountants B.V., the Netherlands, the external auditor as referred to in Transactions with joint ventures and associates Section 1(1) of the Dutch Accounting Firms Oversight Act (Dutch acronym: Wta), as well as by other The transactions with our joint ventures and associates, other than providing equity and receiving Dutch and foreign-based Deloitte individual partnerships and legal entities, including their tax services dividends, principally consist of fees for services provided by the Group, loans issued by the Group and and advisory groups. the related interest income. In EUR millions 2020 2019 Joint ventures Associates Total Financial statements audit fees 1. 5 1. 4
In EUR millions 2020 2019 2020 2019 2020 2019 Other assurance fees 0.1 0.1 Other operating income 8.7 8.0 0.7 0.6 9.4 8.6 Total 1.6 1.5 Amounts owed by 54.8 54.9 – – 54.8 54.9 The financial statements audit fees include the aggregate fees in 2020 and 2019 for professional services rendered for the audit of Vopak’s annual financial statements and annual statutory financial Transactions with major shareholders statements of subsidiaries or services that are normally provided by the auditor in connection Besides the annual dividend distribution, no material related party transactions have been entered into with the audits. with the major shareholders during the years presented. The other assurance fees include the aggregate fees invoiced for assurance and services for other audit Vopak has been informed by HAL Holding N.V. (‘HAL’), that it is technically required for HAL to services, which generally only the company’s independent auditor can reasonably provide, such as consolidate Vopak in its Consolidated financial statements as from 1 January 2014. Accordingly, HAL has comfort letters and audit of grant statements. requested Vopak to provide detailed accounting information with respect to the Consolidated financial statements in order for HAL to be able to consolidate Vopak in its Consolidated statements. To facilitate In line with the Dutch independence legislation, no tax advisory, compliance services or other non-audit HAL in complying with its obligations under IFRS 10, a Memorandum of Understanding was signed services were provided in the years presented. between Vopak and HAL with respect to confidentiality, the process of exchanging information, subsequent events procedures, external auditor involvement and attendance rights to the Audit The total fees charged by Deloitte Accountants B.V., the Netherlands to the company and its Committee meetings for an independent financial expert on behalf of HAL. consolidated Group entities amounted to EUR 0.9 million in 2020 (2019: EUR 0.7 million). Of the 2020 fees, an amount of EUR 0.1 million (2019: EUR 0.1 million) relates to non-recurring fees for the 2019 audit.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 192
Section 8 Income taxes Income tax recognized in the Consolidated statement of income
This section comprises all relevant disclosures and specifications regarding tax recognized in the In EUR millions 2020 2019 Consolidated financial statements. Current taxes
Current financial year 60.3 61.7 The following notes are presented in this section: Adjustments for prior years 0.6 1. 0 • 8.1 Income taxes 60.9 62.7 • 8.2 Deferred taxes Deferred taxes Note 8.1 Income taxes Adjustments for prior years 5.3 - 12.5 Temporary differences 10.4 15.6 Recognition of tax losses and tax credits - 2.0 - 7.3 Accounting policies Taxes on profit or loss for the financial year comprise current and deferred taxes. Taxes are recognized in Changes in tax rates - 1.5 - 0.2 the statement of income unless they relate to items directly recognized in Other comprehensive income 12.2 - 4.4 or directly in equity. Tax on profit 73.1 58.3
Income tax paid 54.9 71.2 Current taxes are the expected taxes payable on the taxable income for the year, using tax rates Movements in current and deferred tax balances 18.2 - 12.9 enacted at the end of the reporting period, plus any adjustments to prior-year tax payable. Income tax expense 73.1 58.3
Deferred taxes are provided for, using the liability method, whereby provisions are made for all taxable temporary differences between the carrying amounts of assets and liabilities for financial reporting In 2020, EUR 2.8 million of exceptional expenses were recognized in the income tax expenses purposes and their tax base. No deferred taxes are provided for the following temporary differences: (2019: gain of EUR 2.7 million). For both years presented, these related to the tax effects on the goodwill not deductible for tax purposes; the initial recognition of assets and liabilities that neither affect exceptional items. accounting nor taxable profit; and differences relating to investments in subsidiaries to the extent that they will not reverse in the foreseeable future. The calculation is based on tax rates enacted or The main difference between the tax expenses for the year and the current tax charge was caused by substantively enacted, at the end of the reporting period. deferred tax expenses mostly related to differences in the depreciation rates of Property, plant and equipment as well as lease accounting. For further details on the deferred tax position, reference is Deferred tax assets, including assets arising from losses carried forward, are recognized to the extent made to note 8.2. that it is probable that future taxable profits will be available against which these temporary differences or unused tax losses can be utilized. Deferred tax assets and liabilities are stated at nominal value. Tax expenses per share The tax expense per share amounted to EUR 0.58 in 2020 (2019: EUR 0.46). The Group recognizes liabilities for potential tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters differs from the amounts that were More information on Vopak's responsibility towards taxation can be found in the Sustainability chapter. initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.
A provision is formed for tax, principally regarding withholding tax, for which a liability might arise in connection with the distribution of retained earnings if a decision has been made to distribute such earnings.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 193
Reconciliation of effective tax rate As the Group extensively operates via investments in joint venture and associates, which fall under the Dutch participation exemption, and of which the profits have been taxed in the country of establishment In EUR millions 2020 2019 while the net profits of these entities are part of the EBIT(DA) of the Group, the effective tax rate of Profit before income tax 403.6 662.1 theVopak Group is per definition always lower than the weighted average tax rate of that of its subsidiaries. Tax on profit 73.1 58.3 Effective tax rate 18.1% 8.8% For an overview of the effects of the joint ventures and associates on the effective tax rate of the Group, as well as the proportional effective tax rate, reference is made to note 20 of the Sustainability Section. Composition: Amount % Amount % Weighted average statutory tax rate 93.9 23.3 166.3 25.1 Income tax recognized in other comprehensive income Participation exemption - 45.7 - 11.3 - 106.1 - 16.0 In EUR millions Note 2020 2019 Non-deductible expenses 9.0 2.2 6.5 1. 0 On changes in the value of cash flow hedges 5.2 0.5 - 0.2 Changes in tax rates - 1.5 - 0.4 - 0.8 - 0.1 Recognition of tax losses and On exchange differences and net investment hedges 5.2 - 1.2 - 0.3 tax credits 10.7 2.7 2.1 0.3 On use of cash flow hedges 5.2 - 0.1 - 0.7 Tax facilities - 0.9 - 0.2 - 0.8 - 0.1 On remeasurements of defined benefit plans - 1.6 - 1.8 Movements in prior-year taxes 5.8 1. 4 - 11.5 - 1.7 Total - 2.4 - 3.0 Other effects 1. 8 0.4 2.6 0.3 Effective tax (rate) 73.1 18.1 58.3 8.8 Note 8.2 Deferred taxes
Income tax expenses -including exceptional items- amounted to EUR 73.1 million in 2020, an increase of EUR 14.8 million compared to EUR 58.3 million in 2019. The effective tax rate -including exceptional items- was 18.1% compared to 8.8% in 2019. This increase was mainly due to changes in profit before Key accounting estimates and judgments income taxes and the applicability of participation exemptions thereto and differences in corrections for Deferred tax assets, including those arising from carry-forward losses, are recognized if it is previous years. probable that taxable profit is available against which losses can be offset. In determining this, Vopak uses estimates and assumptions that also affect the measurement of the deferred tax Income tax expenses -excluding exceptional items- amounted to EUR 70.3 million in 2020, an increase assets. A maturity schedule of the unrecognized carry-forward losses is shown on the next page. of EUR 9.3 million (15%) compared to EUR 61.0 million in 2019. The effective tax rate -excluding exceptional items- was 17.3% compared to 13.5% in 2019. This increase was mainly due to changes in earnings and the applicability of participation exemptions thereto and differences in corrections for previous years. Accounting policies Deferred tax assets and liabilities are offset against each other to the extent that this is a legally The non-deductible expenses category which is included as part of the effective tax reconciliation enforceable right and the deferrals belong to the same fiscal unit. The decision to account for includes business expenses which are not tax deductible under local (tax) law. The Movements in deferred tax assets is taken periodically for each fiscal unit after critically assessing whether conditions prior-year taxes includes several tax positions which have been confirmed by the local tax authorities are sufficient to realize these deferred tax assets, based on the strategic plans and related tax plans. resulting in a true-up of tax provisions.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 194
Deferred tax assets and liabilities
Temporary differences
Carry forward Property, plant Employee Offset assets Statement of In EUR millions losses and equipment1 Loans granted benefits Lease liabilities Other and liabilities financial position Assets 11. 4 1. 2 – 14.2 – 23.2 - 42.4 7. 6 Liabilities – - 232.1 - 0.3 - 0.2 – - 17.5 42.4 - 207.7 Balance 31 December 2018 11.4 - 230.9 - 0.3 14.0 – 5.7 – - 200.1 Initial application IFRS 16 – - 117.4 – – 133.4 – 16.0 Balance 1 January 2019 11.4 -348.3 -0.3 14.0 133.4 5.7 -184.1 Movements: - Statement of income 7. 0 0.8 0.4 0.4 0.4 - 4.5 4.5 - Other comprehensive income – 1. 2 – 1. 0 – - 2.2 – - Acquisitions/divestments – 46.3 – - 3.1 - 18.4 8.3 33.1 - Exchange differences 0.5 - 7.2 – 0.3 2.2 – - 4.2 Balance 31 December 2019 18.9 - 307.2 0.1 12.6 11 7. 6 7. 3 - 150.7
Assets 18.9 2.0 0.4 12.6 11 7. 6 24.0 - 144.7 30.8 Liabilities – - 309.2 - 0.3 – – - 16.7 144.7 - 181.5 Balance 31 December 2019 18.9 - 307.2 0.1 12.6 11 7. 6 7. 3 – - 150.7 Movements: - Statement of income 7. 8 18.1 – - 0.9 44.9 - 82.1 - 12.2 - Other comprehensive income – - 0.1 – 1. 6 – 1. 6 3.1 - Acquisitions/divestments – 4.2 – – – - 3.3 0.9 - Exchange differences - 2.6 15.0 0.1 - 0.8 – 0.8 12.5 Balance 31 December 2020 24.1 - 270.0 0.2 12.5 162.5 - 75.7 - 146.4
Assets 24.1 2.1 0.4 12.6 162.5 26.4 - 191.2 36.9 Liabilities – - 272.1 - 0.2 - 0.1 – - 102.1 191.2 - 183.3 Balance 31 December 2020 24.1 - 270.0 0.2 12.5 162.5 - 75.7 – - 146.4 1 Owned and right-of-use assets
In determining the deferred tax liabilities, withholding tax and any other tax due for unremitted earnings In EUR millions 2021 2022 2023 2024 2025+ unlimited Total of subsidiaries were not recognized. These earnings are deemed to have been permanently reinvested. Offsettable carry-forward losses – – – – – 1. 3 1. 3
Deferred tax assets not recognized in the Consolidated statement of Deferred tax assets regarding these carry-forward losses have not been recognized because it is not financial position probable that sufficient taxable profit will be available to utilize the deferred tax asset in time. Carry-forward losses for which deferred tax assets have not been recognized amounted to EUR 1.3 million at 31 December 2020 (2019: EUR 4.7 million). The maturity schedule is as follows:
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 195
Section 9 Other disclosures Note 9.1 Earnings per ordinary share - number of shares Basic earnings per ordinary share are calculated by dividing the net profit attributable to holders of This section provides details on items that are not included in other sections, but which are of statutory ordinary shares by the time-weighted average number of outstanding ordinary shares (excluding the or secondary importance for understanding the Group's financial performance of the Group due to their average number of treasury shares). The weighted average number of outstanding shares was nature. A list of principal subsidiaries, joint ventures and associates of the Vopak Group is also included 126,524,451 in 2020 (2019: 127,637,900). in this section. In calculating the diluted earnings per ordinary share, the weighted average number of outstanding The following notes are presented in this section: shares is adjusted for the dilutive effects of all dilutive potential ordinary shares, such as share-based • 9.1 Earnings per ordinary share - number of shares payment arrangements. • 9.2 Loans granted and finance lease receivables • 9.3 Impact of COVID-19 pandemic The composition of the weighted average number of outstanding shares and of the diluted weighted • 9.4 Pensions and other employee benefits average number of outstanding shares is as follows: • 9.5 Provisions • 9.6 Investments and other financial assets In thousands Note 2020 2019 • 9.7 Investment commitments undertaken Outstanding ordinary shares at 1 January 5.1 127,625 127,665 • 9.8 Contingent assets and contingent liabilities Effects of cancellation shares issued/share buyback program 5.1 - 1,114 – • 9.9 Financial assets and liabilities and credit risk Movements treasury shares 5.1 13 - 27 • 9.10 New standards and interpretations not yet implemented Basic weighted average number of ordinary shares 126,524 127,638 • 9.11 Principal subsidiaries, joint ventures, associates and investments Dilutive effect of LTSPs (equity-settled part) 166 345 • 9.12 Events after the reporting period Weighted average number of ordinary shares including dilutive effect 126,690 127,983
At 31 December 2020, the company owned 345,736 treasury shares (2019: 209,984). The treasury shares have no voting rights attached to them, nor are they eligible for dividends during the period when these are held by the company.
When the vesting conditions of the equity-settled share-based payment arrangements are met, the settlement will result in an increase of the number of shares outstanding, which will have a dilutive effect. During 2020, the LTSP 2017-2019 share-based payment arrangement was settled resulting in the transfer of 44,248 treasury shares to eligible employees (2019: 25,983 shares).
The LTSP 2018-2020 will be settled in 2021. For more information, reference is made to note 7.2.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 196
Note 9.2 Loans granted and finance lease receivable At initial recognition, the Group measures loans granted at its fair value plus directly attributable transaction costs. Subsequently, these items are carried at amortized cost using the effective Accounting policies interest method. The Group classifies its loans granted and other debt investments at amortized cost only if both of the following criteria are met: Assets held under a finance lease are presented in the Statement of financial position as a receivable at • the asset is held within a business model with the objective of collecting the contractual cash flows, an amount equal to the net investment in the lease. The income on the finance lease receivable is based and on a pattern reflecting a constant periodic rate of return on the lessor’s net investment in the finance • the contractual terms give rise on specified dates to cash flows that are solely payments of principal lease and is presented as Other income. and interest on the principal outstanding. The expected credit losses associated with its loans granted and other issued debt instruments carried All loans granted and other debt investments meet these criteria and are measured at amortized cost. at amortized cost are assessed by the Group on a forward looking basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
Loans to joint ventures and associates Other loans Total loans granted Finance lease receivable
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 Carrying amount at 1 January 54.9 2.0 31.8 23.1 86.7 25.1 28.5 27.9 Movements: Loans granted 5.4 53.5 6.8 8.6 12.2 62.1 – – Repayments – - 2.0 - 0.1 – - 0.1 - 2.0 - 5.1 - 4.9 Reclassification to assets held for sale – – – – – – – – Finance lease interest income – – – – – – 5.0 5.1 Exchange differences - 5.5 1. 4 - 2.3 0.1 - 7.8 1. 5 0.2 0.4 Carrying amount at 31 December 54.8 54.9 36.2 31.8 91.0 86.7 28.6 28.5
Non-current receivables 54.8 54.9 36.2 31.8 91.0 86.7 28.6 28.5 Current receivables – – – – – – – – Carrying amount at 31 December 54.8 54.9 36.2 31.8 91.0 86.7 28.6 28.5
In 2019, the movement of EUR 53.5 million for Loans to joint ventures and associated was related to Reference is made to note 9.9 for the fair value information and note 6.7 on the remaining period at the a position with one of our joint ventures in the Asia and Middle East division. In addition, the increase end of the reporting period to the contractual maturity date. of the Other loans granted for both years presened includes a loan to the non-controlling shareholder of our terminals in South Africa (Europe & Africa division). Apart from these movements, there were With respect to the loans granted and the finance lease receivables, which are neither impaired nor past no material movements in the loans granted and finance lease receivables during the years presented. due, there are no indications as of the reporting date that the debtors will not meet their payment obligations. Loans granted do not include any subordinated loans.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 197
Note 9.3 Impact of COVID-19 pandemic Accounting policies The pandemic spread of COVID-19 (Coronavirus) has a significant impact on all people and organizations Defined benefit plans around the world. Our main focus is on the health of the people working at our terminals, offices or at The Group's net pension obligation is calculated by an independent actuary, using the projected unit home around the world and to limit the spread of the Coronavirus, to manage the impact on our credit method. This calculation is performed separately for each plan by estimating the amount of the business and to assess the impact on the economy and society. Therefore, we have put global and local benefit that employees have earned in relation to their past services. The liability recognized in the measures into place to protect our employees, their families and our operations based on information balance sheet is the present value of these benefits at the end of the reporting period (defined benefit provided by the World Health Organization, national and local health authorities. We have monitored obligation) less the fair value of plan assets. The defined benefit obligation is determined by discounting developments closely throughout the year and scenario-based contingency plans and other mitigating the estimated future cash flows using interest rates of high-quality corporate bonds with durations measures were ready to implement, if needed. To date, we have observed a limited impact on our matching the terms of the benefits. operations. All our terminals are operational and there have been no significant disruptions to business continuity. The increase in the defined benefit obligation due to the passage of time and the expected return on plan assets, using the same interest rate as for the defined benefit obligation, are included in the Vopak’s strategy is robust and unchanged. An effective control and governance structure to respond to pension costs. the impact of the global pandemic, with continued decision-making to support business execution and well-being of people, has been put in place. Operational and financial performance, cash flows and our Past-service costs are recognized immediately in the statement of income. Actuarial gains and losses financial position have not been significantly affected. Our financial results reflect our resilient business arising from experience adjustments and changes in actuarial assumptions are recognized in equity via performance. Timing of growth projects execution is affected by generic local lockdown measures in Other comprehensive income in the period in which they arise. various countries. When a plan is changed, settled or when a plan is curtailed, the resulting change in the defined benefit Our focus in these circumstances is on the short-term delivery and protection of long-term value. Vopak obligation that relates to past-service or the gain or loss on curtailment is recognized immediately in plays an important role within society by storing vital products with care. We are doing our utmost the statement of income under Personnel expenses. The Group recognizes gains and losses on the during the COVID-19 pandemic to continue to fulfill this role in all our work locations around the world. settlement of a defined benefit plan when the settlement occurs.
Although the pandemic brings a lot of uncertainty and the estimates remain subject to future events, we Defined contribution plans expect to continue to manage our performance in line with our original business plans and Contributions to defined contribution plans are recognized as an expense in the statement of unchanged strategy. income as incurred.
Note 9.4 Pensions and other employee benefits Accounting estimates and judgments applied The majority of employees are either covered by defined benefit plans, defined contribution plans or The defined benefit obligation is determined on the basis of assumptions for future developments in mandatory external pension plans. The defined benefit plans are plans that apply in the United States, variables such as salary increase, price index increase, life expectancy and discount rate. All assumptions Germany and Belgium. These countries mostly operate final-pay pension plans, administrated by pension are assessed at the reporting date. Changes in the assumptions may significantly affect the liabilities and funds separate from the company. pension costs under the defined benefit plans. The weighted average of these assumptions as well as sensitivities of key assumptions are disclosed in this note.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 198
Pensions and other employee benefits The table below provides an overview of the movements in the plan assets and defined benefits obligation for the years presented, showing separately the amounts that were recognized in the income statement, the statement of other comprehensive as well as the cash flows for the period.
Plan assets Defined Benefit Obligation1 Total
in EUR millions 2020 2019 2020 2019 2020 2019 Opening balance defined benefits position at 1 January 115.2 97.5 - 156.5 - 145.3 - 41.3 - 47.8 Movements: Current service costs – – - 5.3 - 4.7 - 5.3 - 4.7 Administration costs and taxes – – - 0.5 - 0.4 - 0.5 - 0.4 Interest income/(expenses) 3.5 3.9 - 4.4 - 5.1 - 0.9 - 1.2 Settlements – – – 16.0 – 16.0 Components of defined benefit income/(costs) recorded in profit or loss 3.5 3.9 - 10.2 5.8 - 6.7 9.7 Return on plan assets (excluding interest income on plan assets) 9.4 13.1 – – 9.4 13.1 Actuarial gains (-) and losses from changes in demographic assumptions (remeasurement) – – 1. 5 0.4 1. 5 0.4 Actuarial gains (-) and losses from experience – – - 1.1 1. 3 - 1.1 1. 3 Actuarial gains (-) and losses from changes in financial assumptions (remeasurement) – – - 16.6 - 22.1 - 16.6 - 22.1 Components of defined benefit income/(costs) recorded in other comprehensive income 9.4 13.1 - 16.2 - 20.4 - 6.8 - 7.3 Benefits paid from the pension fund - 5.4 - 5.7 4.6 4.3 - 0.8 - 1.4 Employer's contibutions 4.2 4.5 0.8 1. 4 5.0 5.9 Exchange differences - 9.7 1. 9 12.1 - 2.3 2.4 - 0.4 Closing balance defined benefits position at 31 December 11 7. 2 115.2 - 165.4 - 156.5 - 48.2 - 41.3 Other net pension obligations – – - 1.0 - 2.4 - 1.0 - 2.4 Total pension position recognized at 31 December 11 7. 2 115.2 - 166.4 - 158.9 - 49.2 - 43.7
Current liabilities - 0.2 - 1.3 Non-current liabilities - 49.0 - 42.4 Net pension obligation recognized at 31 December - 49.2 - 43.7 1 The defined benefits obligation related to unfunded pension plans amounted to EUR 3.3 million at year-end 2020 (2019: EUR 3.3).
In 2019, the defined benefit costs recognized in in the income statement included a settlement result Defined Benefit Obligation of EUR 16.0 million in relation to the unfunded defined benefit plans of the divested German terminal. 2020 2019 Defined benefits obligations Allocated to the plans' participants: Market volatility had a negative impact on the Group's defined benefit plans in 2020, which resulted in Active members - 84.1 - 76.5 a remeasurement loss (gross) of EUR 6.8 million (2019: losses of EUR 7.3 million), being recorded, net Deferred members - 31.8 - 30.5 of tax, in other comprehensive income. These remeasurements were caused by the defined benefit Pensioners - 49.5 - 49.5 obligation impact of deviations from the assumptions set at the beginning of the year which were only Defined benefit obligation at 31 December - 165.4 - 156.5 partly offset by the higher than expected return on plan assets.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 199
Change in the fair value of plan assets and major classes of plan assets Assumptions and sensitivity analysis The following tables summarize the characteristics/main elements of the plan assets at 31 December. Assumptions
Total Total
in EUR millions 2020 2019 2020 2019 Major classes of plan assets Assumptions based on weighted average at 31 December Bonds - investment grade 42.5 48.3 Discount rate on net liability 2.26% 2.89% Bonds - high yield 24.8 19.8 Expected general salary increase 4.18% 4.35% Equity instruments 49.9 47.1 Expected price index increase 2.74% 2.74% Fair value of plan assets at 31 December 11 7. 2 115.2 Average Life expectancy in years for man: 20.6 20.6 Average Life expectancy in years for women: 22.9 23.0
The investments consist of participations in investment funds from reputable asset managers and are therefore well-diversified, such that the failure of any single investment would not have a material impact The discount rates used in the determination of defined benefit obligations and pension expenses are on the overall value of the investment fund. based on high quality corporate bonds (AA) with a duration matching the duration of the pension liabilities. In addition, the calculations were based on recent mortality tables, taking future developments The pension fund has not invested directly in shares of Royal Vopak, parts of the Group or in in mortality rates into account through projections or surpluses. Local historical data were used for real estate of the Group. employee turnover and disability assumptions.
Expected maturity, contribution and impact on result The liabilities and pension expenses related to defined benefit plans are subject to risks regarding The expected maturity analysis of undiscounted pension benefits at 31 December 2020 is as follows: changes in discount rates, plan assets and returns derived from these assets, future salary increases, inflation and life expectancy. Such changes can negatively or positively influence the liabilities and In EUR millions 2021 2022 2023 2024 2025 2026+ Total necessitate additional future pension charges under IAS 19. The table below shows the estimated Undiscounted pension benefits 5.1 5.3 5.9 6.5 5.7 215.5 244.0 impact on the defined benefit obligations for defined benefit plans for each risk variable.
Based on the latest funding agreements, the employer’s contribution is expected to be Sensitivity analysis around EUR 7.3 million in 2021. In EUR millions Change Increase Decrease Sensitivity assumptions Price inflation 1.0% 6.2 - 5.4 Salary growth 0.25% 1. 7 - 1.7 Discount rates 1.0% - 23.1 29.3 Life expectation 1 year 5.0 n/a
The sensitivity analysis is based on changes that are realistically possible as at the end of the financial year. Each change in a significant actuarial assumption was analyzed separately as part of the test. Interdependencies were not taken into account.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 200
Note 9.5 Provisions Movements in provisions
Accounting policies Environmental In EUR millions liabilities Other Total Provisions are recognized for legal or constructive obligations that arose in the past, the amount of Non-current liabilities 14.8 21.1 35.9 which, though uncertain, can be reliably estimated and where it is probable that the settlement of the Current liabilities 3.1 21.1 24.2 obligations will entail a cash outflow. Provisions are measured at the present value of the expenditures Balance at 31 December 2019 1 7. 9 42.2 60.1 expected to be required to settle the obligation using a pre-tax rate that reflects current market Movements: assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognized as interest expense. Additions 0.4 7. 1 7. 5 Withdrawals - 1.1 - 19.4 - 20.5 In accordance with current legislation, environmental plans and other measures to be adopted are Releases - 0.8 - 0.3 - 1.1 agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or Exchange differences - 0.4 - 1.0 - 1.4 other statutory obligations arise, a provision is formed based on the most reliable estimate possible of Balance at 31 December 2020 16.0 28.6 44.6 the future expenses. Non-current liabilities 10.8 11. 4 22.2 Current liabilities 5.2 1 7. 2 22.4 A provision for reorganization is formed when Vopak has approved a detailed and formalized Balance at 31 December 2020 16.0 28.6 44.6 reorganization plan and when the reorganization has either commenced or been announced. Expected withdrawals Provisions for other deferred long-term employee benefits, other than pensions and other employee < 1 year 5.2 1 7. 2 22.4 benefits, for example, redundancy benefits, anniversary incentives and long-term remuneration settled in 2nd year 2.2 0.2 2.4 cash, are calculated using the method for defined benefit plans. Any actuarial results arising are 3rd year 0.5 0.1 0.6 recognized immediately in the statement of income. The same applies to any changes relating 4th year 0.7 1. 2 1. 9 to past service. 5th year 1. 0 0.3 1. 3 > 5th year 6.4 9.6 16.0 Total 16.0 28.6 44.6
Key accounting estimates and judgments The amount recognized as a provision is management's best estimate of the amount required to Environmental provisions settle the obligation. The outcome depends on future events that are uncertain by nature. In Vopak is obliged to clean up soil contamination at different locations. In general, an accurate and reliable assessing the likely outcome of lawsuits and tax disputes, management also bases its estimate of the provision for this environmental risk can only be made after conducting a thorough assessment on external legal assistance and established precedents. survey and drawing up a management plan for the site, on the basis of which the governmental authorities issue an order. The Group is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites have to be decontaminated before being handed back at the end The environmental provisions primarily relate to historical contaminations. Financial exposures to of the contractual period. Under current legislation, environmental plans and any other measures potential new soil contaminations in relation to products spills are very limited. If a spill or any unwanted to be adopted have to be agreed with local, regional and national authorities as appropriate. As discharge takes place, emergency mitigation procedures are in place at all the terminals which contain soon as such plans are approved or other legal obligations arise, a provision is formed based on and remediate the spill immediately, according to the Vopak standards. the most reliable estimate of possible future expenses. Given the degree of difficulty in making estimates, this does not guarantee that no additional costs will arise in the future.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 201
At year-end 2020, the total provision for environmental liabilities amounted to EUR 16.0 million Note 9.6 Investments and other financial assets (2019: EUR 17.9 million). The provision is mainly related to environmental liabilities at various terminals in The group has investments in the equity of other entities which do not classify as either a subsidiary, the divisions Europe & Africa and Americas. During 2020 no significant movements have been recorded. joint venture or associate. These investments primarily concern the investments in Sabtank in An exceptional item of EUR 0.8 million related to the reversal of the Quebec impairment has been Saudi Arabia, Vopak Terminal Venezuela and the investments held by Vopak Ventures B.V. These recorded. For more information, reference is made to note 3.8. investments in unlisted entities are not held for trading and are considered to be strategic investments.
Other provisions Accounting policies The other provisions primarily relate to legal and claims-related provisions and the provisions for the The group makes an irrevocable election on an investment-by-investment basis at the time of initial LTIPs. Many of the claims-related provisions concern insured events, for which the receivable on the recognition to measure these investments either as: insurance company is recognized separately under the Other receivables. • Fair value through profit and loss (FVPL); or • Fair value through Other comprehensive income (FVOCI). LTIPs Other provisions included an amount of EUR 2.6 million (2019: EUR 3.8 million) for the LTCPs Investments and other financial assets are measured at fair value (level 3). At initial recognition, the (see note 7.2), and EUR 0.0 million (2019: EUR 0.7 million) for the cash-settled share-based payments Group measures a financial asset at its fair value. Transaction costs of financial assets measured at FVPL of the LTSPs (see note 1 to the first table of note 7.2). EUR 1.8 million of the total provision in relation are expensed in profit or loss, while these are recognized in Other comprehensive income for financial to the LTIPs will be settled in 2021 (2019: EUR 2.6 million). assets measured at FVOCI.
The movement in the provisions in connection with the LTIPs recognized in the income statement The Group subsequently measures all equity investments at fair value. Where the group’s management amounted to an expense of EUR 0.9 million in 2020 (2019: expense of EUR 3.4 million). Reference is has elected to present fair value gains and losses on equity investments in OCI, there is no subsequent also made to note 7.2. reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognized in profit or loss as dividend Other income as part of the Other operating income. Reference is also made to note 2.4. At year-end 2020, EUR 26.0 million (2019: EUR 37.7 million) was recognized under the Other provisions, which primarily comprises various smaller legal cases and claim settlements of which the larger part was At year-end 2020, all equity investments are classified as FVOCI. related to insured events. On balance, EUR 5.1 million (2019: EUR 4.1 million) was added for expected claims in 2020. The total fair value of the investments amounted to EUR 36.5 million (2019: EUR 30.1 million) at year-end 2020. The total dividend income in 2020 from these investments amounted to EUR 2.2 milion An exceptional gain was recognized for the amount of EUR 0.7 million relating to the reversal of a (2019: EUR 2.4 million). provision for reorganization at our terminal in Quebec City in Canada. For more information, reference is made to note 3.8. Note 9.7 Investment commitments undertaken The investment commitments undertaken by the Group for subsidiaries amounted to EUR 199.7 million No other individual items within the remaining provisions are considered to be individually material. as at 31 December 2020 (2019: EUR 329.9 million), and were primarily related to property, The company expects that the current cases provided for will be substantively resolved within the plant and equipment. coming five years.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 202
Note 9.8 Contingent assets and contingent liabilities Other contingencies Environmental obligations Contingencies in respect of joint ventures and associates The Group is exposed to risks regarding environmental obligations arising from past activities. For example, a number of sites have to be decontaminated and restored to their original condition before being handed back at the end of the contractual period. Under current legislation, environmental plans Joint ventures Associates Total and any other measures to be adopted have to be agreed with local, regional and national authorities as appropriate. As soon as such plans are approved or other legal obligations arise, a provision is formed In EUR millions 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 31-Dec-20 31-Dec-19 Commitments to provide debt or based on the most reliable estimate possible of future expenses. The Executive Board is of the opinion equity funding 58.5 11 7. 5 6.3 8.6 64.8 126.1 that the currently recognized provisions are adequate, based on information currently available. However, Guarantees and securities given the degree of difficulty in making estimates, this does not guarantee that no additional costs will provided 101.3 107.4 10.5 11. 4 111.8 118.8 arise going forward.
Other legal proceedings and risks The 2020 decrease in commitments related primarily to the completed project at our Pengerang As a result of its day-to-day activities, the Group is involved in a number of other legal proceedings. Independent Terminal (PITSB) in Malaysia as well as lower commitments for terminals within our The Executive Board is of the opinion that for the legal cases and risks for which no provisions have Americas division. been recognized, it is not probable at year-end that the final outcome will result in a cash outflow, therefore no provisions have been formed. Furthermore, as explained in the Risks and risk management The amounts of guarantees and securities can potentially be called within one year. section, the Group can be held liable for any non-compliance with laws and regulations. The risks in connection with non-compliance, as well as the potential impact on the company, are disclosed in the The joint venture and associates of the Group are currently, and may from time to time become, involved Internal control and risk management section of this report. in a number of legal proceedings, including inquiries from, or discussions with, governmental authorities (including tax authorities) that are incidental to their operations. For the contingent liabilities of the joint As part of divestments of terminals and assets, Vopak has provided certain customary representations ventures and associates as at year-end related to legal cases, it is based on the current facts and and warranties in the relevant sales purchase agreements. These representations and warranties will circumstances not believed that they may have a material adverse effect on the financial position or generally terminate, depending on their specific features, a number of years after the relevant profitability of the Group. Due to inherent uncertainties, the Group cannot make any accurate transaction completion date. Based on the current facts and circumstances, management has quantification of any cost, or timing of such cost, which may arise from any of the legal proceedings determined that for the items for which no provision is currently recognized, the likelihood of a cash referred to in this report, however costs in complex litigation may be substantial. outflow relating to these items is considered to be remote.
Guarantees and securities included in ratio calculations The notional amount of guarantees and securities provided on behalf of participating interests in joint ventures and associates, which is also included in ratios, decreased from EUR 87.1 million at 31 December 2019 to EUR 80.8 million at 31 December 2020. Of this amount, nil was recognized in the statement of financial position (2019: nil). Reference is also made to note 5.5.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 203
Note 9.9 Financial assets and liabilities and credit risk Determination of fair value for financial instruments A number of the Group’s accounting policies and disclosures require the determination of fair value for Financial assets and liabilities the financial instruments. A fair value measurement is an estimate of the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market Carrying amount Fair value participants at the measurement date. Where available, fair value measurements are derived from In EUR millions Note 2020 2019 2020 2019 quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1). In the absence of Other financial assets 36.5 30.1 36.5 30.1 such information, other observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from Currency derivatives - 11.8 9.6 - 11.8 9.6 prices), are used to estimate fair values (level 2). No material financial instruments were measured at fair Financial instruments at fair value 24.7 39.7 24.7 39.7 value using level 3 (inputs not based on observable market data). Inputs derived from external sources are corroborated or otherwise verified, as appropriate. Loans granted 9.2 91.0 86.7 91.0 86.7 Trade and other receivables 4.2 276.1 296.1 276.1 296.1 The fair values of the Private Placements, revolving credit facility and other long-term bank loans are Cash and cash equivalents 5.5 68.3 94.5 68.3 94.5 measured by discounting the future cash flows using observable market interest information (level 2) as Finance lease receivable 9.2 28.6 28.5 28.6 28.5 no similar instrument is available due to the specific profiles of the instruments. The calculations include Loans and receivables 464.0 505.8 464.0 505.8 credit spreads based on the most recent borrowing contracts. Bank overdrafts and short-term borrowings 5.5 - 214.3 - 184.5 - 214.3 - 184.5 US Private Placements 5.5 - 1,448.6 - 1,303.2 - 1,677.1 - 1,451.2 The fair values of interest rate swaps, cross-currency interest rate swaps and forward foreign exchange JPY Private Placement 5.5 - 157.6 - 164.0 - 215.3 - 230.9 contracts are determined by discounting the future cash flows using the applicable period-end Bank loans 5.5 - 122.9 - 66.2 - 126.3 - 67.7 observable yield curve, taking into account credit risk and the risk of non-performance. Lease liabilities 5.5 - 699.2 - 564.9 - 699.2 - 564.9 Credit facilities and other long-term loans 5.5 - 15.1 - 147.0 - 15.1 - 147.0 In view of the short-term nature or the magnitude of the amounts, the Group considers that the fair value of loans granted, trade and other receivables, cash and cash equivalents, bank overdrafts, credit Trade creditors 4.3 - 51.4 - 41.0 - 51.4 - 41.0 facilities, other long-term loans and trade creditors are not materially different from their carrying value. Other creditors 4.3 -132.2 - 146.6 -132.2 - 146.6 Other financial liabilities -2,841.3 - 2,617.4 -3,130.9 - 2,833.8 The fair value of the Other equity investments (level 3) are based on discounted cash flow projections Net at amortized cost -2,377.3 - 2,111.6 -2,666.9 - 2,328.0 based on reliable estimates of future cash flows or recent transactions. Standby credit facility 5.5 1,054.7 926.5 Standby bank facility 200.0 152.0 The initial measurement at the trade date of all financial instruments is the fair value. Except for Unrecognized financial instruments 1,254.7 1,078.5 derivatives, the initial measurement of financial instruments is adjusted for directly attributable transaction costs.
Note 9.10 New standards and interpretations not yet implemented There are no new accounting standards, amendments to existing standards or new IFRIC interpretations published that are not yet effective that are expected to have a material impact on the Group in future reporting periods and on foreseeable future transactions.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 204
Note 9.11 Principal subsidiaries, joint ventures, Vopak Terminal Vlaardingen B.V. Vopak Terminals Singapore Pte. Ltd. (69.5%)2 associates and investments Vopak Terminal Vlissingen B.V. Vopak Terminal Penjuru Pte. Ltd. (100%)3 Overview as per 31 December 2020 Vopak Ventures B.V. Vopak Gas Terminal LLP (80%)4 Monros Insurance Pte. Ltd. SUBSIDIARIES South Africa Vopak Terminal Durban (Pty) Ltd. (70%) Vietnam Europe, Middle East & Africa Vopak South Africa Developments (Pty) Ltd. (70%) Vopak Vietnam Co. Ltd. Belgium Vopak Reatile Richards Bay (Pty) Ltd. (70%) Vopak Agencies Antwerpen NV Americas Vopak Terminal Eurotank NV Switzerland Brazil Vopak Chemical Terminals Belgium NV Monros AG Vopak Brasil S.A. VPK Partiçipacões e Serviçoes Portuários Ltda. Germany United Kingdom Vopak Agencies Germany GmbH Vopak Holding Bacrippuls Ltd Canada Vopak Terminals of Canada Inc. The Netherlands Asia Pacific Vopak Terminals of Eastern Canada Inc. Vopak Agencies Amsterdam B.V. Australia Vopak Agencies Rotterdam B.V. Vopak Terminals Australia Pty Ltd. Colombia Vopak Agencies Terneuzen B.V. Vopak Terminals Sydney Pty Ltd. Vopak Colombia S.A. Vopak Chemicals Logistics Netherlands B.V. Vopak Terminal Darwin Pty Ltd. Vopak Global Engineering Services B.V. Mexico Vopak Europe & Africa B.V. China Vopak Mexico S.A. de C.V. Vopak Finance B.V. Vopak China Management Company Ltd. Vopak Global IT B.V. Vopak Terminal Zhangjiagang Ltd. Panama Vopak Global Procurement Services B.V. Vopak Terminal Shangdong Lanshan Ltd. (60%)1 Vopak Panama Atlantic Inc. Vopak Global Shared Services B.V. Vopak Terminal Ningbo Co. Ltd. (85%) Vopak LNG Holding B.V. United States Vopak Maasvlakte Terminal BV India Vopak North America Inc. Vopak Nederland B.V. Vopak Terminals Kandla (CRL Terminals Pvt, Ltd.) Vopak Terminals North America Inc. Vopak Oil Rotterdam B.V. Vopak Terminal Deer Park Inc. Vopak Terminal Botlek B.V. Indonesia Vopak Terminal Corpus Christi5 Vopak Terminal Chemiehaven B.V. PT Vopak Terminal Merak (95%) Vopak Terminal Savannah Inc. Vopak Terminal Europoort B.V. Vopak Terminal Los Angeles Inc. Vopak Terminal Laurenshaven B.V. Singapore Vopak Terminal Long Beach Inc. Vopak Terminals North Netherlands B.V. Vopak Agency Singapore Pte Ltd Vopak Agencies Americas Corp. Vopak Terminal TTR B.V. Vopak Asia Pte. Ltd.
1 Vopak Terminal Penjuru Pte. Ltd. 60% ownership in Vopak Terminals Shangdong Lanshan 2 Vopak Holding Singapore Pte. Ltd 69.5% ownership in Vopak Terminals Singapore Pte. Ltd. 4 Vopak Terminals Singapore Pte. Ltd. 80% ownership in Vopak Gas Terminal LLP 3 Vopak Terminals Singapore Pte. Ltd. 100% ownership in Vopak Terminals Penjuru Pte. Ltd. 5 Legally part of Vopak Terminal Deer Park Inc.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 205
JOINT VENTURES Malaysia Malaysia Kertih Terminals Sdn. Bhd. (30%)1 Pengerang Terminals (Two) Sdn. Bhd. (25%)5 Europe, Middle East & Africa Pengerang Terminals Sdn. Bhd. (49%)2 Germany Pengerang Independent Terminals Sdn. Bhd. (90%)3 Saudi Arabia German LNG Terminal GmbH (33.3%) Jubail Chemicals Storage & Services Company LLC / Chemtank (25%) Singapore The Netherlands Banyan Cavern Storage Services Pte. Ltd. (45%)4 Pakistan Gate terminal B.V. (50%) Engro Elengy Terminal Pakistan Ltd (44%) MultiCore CV (25%) Thailand Thai Tank Terminal Ltd. (49%) The Netherlands Pakistan Vopak Terminal Eemshaven B.V. (10%) Engro Vopak Terminal Ltd. (50%) Americas Helios Eemshaven B.V. (8%)6 Brazil Maasvlakte Olie Terminal N.V. (16.67%) Spain Uniao-Vopak Armazens Gerais Ltda. (50%) Terminales Quimicos SA (Terquimsa) (50%) INVESTMENTS Mexico Sweden Terminal de Altamira de S. de R.L. de C.V. (60%) Germany Vopak Agencies Sweden A.B. (50%) Hydrogenious LOHC Technologies GmbH (10.3%) Panama United Arab Emirates Payardi Terminal Company S. de R.L. (50%) Netherlands Vopak Horizon Fujairah Ltd. (33.33%) Falcker Holding B.V. (25.4%) United States Harbour Stone B.V. (24.9%) Asia Pacific Vopak Industrial Infrastructure Americas LLC (VIIA) (50%) HyET Holding B.V. (5%) China Vopak Moda Houston LLC (50%) HyET Energy Systems B.V. (13%) Vopak Shanghai Logistics Co. Ltd. (50%) HyperSoniq B.V. (29.7%) Vopak Nanjiang Petrochemicals Terminal Tianjin Co. Ltd. (50%) ASSOCIATES Teqplay B.V. (24%) Vopak Bohua (Tianjin) Terminal Co. Ltd. (50%) TWTG Group B.V. (30.3%) Tianjin Lingang Vopak Bohua Jetty Co. Ltd. (30%) Canada Vopak (Qinzhou) Jetty Co. Ltd. (51%) Ridley Island LPG Export GP Inc. (30%) Saudi Arabia SABIC Terminal Services Company Ltd / Sabtank (10%) Indonesia China PT Jakarta Tank Terminal (49%) Zhangzhou Gulei Haiteng Jetty Investment and Singapore Management Co. Ltd. (30%) Performance Rotors Pte. Ltd. (20%) Korea Vopak Terminals Korea Ltd. (51%) Colombia United Kingdom Sociedad Portuaria El Cayo SA ESP (SPEC) (49%) Advanced 3D Laser Solutions Limited (25%)
Venezuela 1 Vopak Terminal Penjuru Pte. Ltd. 30% ownership in Kertih Terminals Sdn. Bhd. Vopak Venezuela S.A. (100%) 2 Vopak Terminal Pengerang B.V. 49% ownership in Pengerang Terminals Sdn. Bhd. 3 Pengerang Terminals Sdn Bhd. 89.9% ownership in Pengerang Independent Terminals Sdn. Bhd. 5 Economic shareholding in PT2SB temporarily increased to 30%; legal ownership is 25% 4 Vopak Terminals Singapore Pte. Ltd. 45% ownership in Banyan Cavern Storage Services Pte. Ltd. 6 Vopak Terminal Eemshaven B.V,. in which Vopak has a 10% share, holds 80% of the shares in Helios Eemshaven B.V. Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Consolidated Financial Statements 206
Note 9.12 Events after the reporting period On 17 February 2021, Vopak announced that it will expand its Vopak Terminal Vlaardingen in the Port of Rotterdam for the storage of waste-basted renewable feedstocks for the production of biodiesel. In total 16 tanks with a combined capacity of 64.000 cbm will be constructed. The project is expected to be completed in the fourth quarter of 2022.
On 17 February 2021, Vopak announced to expand its industrial terminal services offering by constructing another new jetty in Qinzhou, China, exclusively used for gas products including propane, butane, ethylene and propylene. The project is expected to be completed in the second half of 2022.
Vopak Annual Report 2020 Company Financial Statements Company Financial Statements
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Company Financial Statements 207 Company Financial Statements
Company Statement of Financial Position before Profit Appropriation
In EUR millions Note 31-Dec-20 31-Dec-19 In EUR millions Note 31-Dec-20 31-Dec-19 Participating interests in group companies 2 2,144.5 2,004.7 Interest-bearing loans 5 1,485.0 1,287.2 Property, plant & equipment - owned assets 6.0 6.7 Lease liabilities 30.9 16.9 Property, plant & equipment- leased assets 32.6 18.6 Derivative financial instruments 6 5.4 – Loans granted 3 2,437.2 2,486.5 Provisions 4.8 7. 3 Derivative financial instruments 6 9.1 19.4 Non-current liabilities 1,526.1 1,311.4 Deferred taxes 29.0 24.7 Share capital 62.9 63.9 Total non-current assets 4,658.4 4,560.6 Share premium 194.4 194.4 Trade and other receivables 0.9 3.7 Legal reserve for participating interests 4 404.0 383.8 Taxes receivable – 0.4 Translation reserve - 123.9 - 8.5 Prepayments 0.6 3.4 Revaluation reserve derivatives - 115.0 - 117.2 Derivative financial instruments 6 1. 4 28.0 Revaluation reserve assets 16.5 18.5 Cash and cash equivalents 1. 9 – Transaction reserve non-controlling interest 1. 3 1. 3 Total current assets 4.8 35.5 Other reserves 4 2,239.6 1,940.1 Bank overdrafts – 3.3 Unappropriated profit 4 300.9 571.0 Interest-bearing loans 5 121.2 180.0 Shareholders' equity 2,980.7 3,047.3 Lease liabilities 2.2 3.1 Derivative financial instruments 6 7. 1 24.6 Total 4,506.8 4,358.7 Trade and other payables 23.7 22.7 Pension and other employee benefits 7 – 0.8 Company Statement of Income Provisions 2.2 2.9 Total current liabilities 156.4 237.4 In EUR millions Note 2020 2019 Current assets less current liabilities - 151.6 - 201.9 Other operating income 0.7 0.8 Total operating income 0.7 0.8 Total assets less current liabilities 4,506.8 4,358.7 Personnel expenses 8 38.0 33.6 Other operating expenses 26.6 28.2 Depreciation and amortization 3.3 3.5 Total operating expenses 67.9 65.3 Interest and similar expenses - 62.9 - 76.9 Result before income tax - 130.1 - 141.4 Income tax 9 32.9 37.9 Share in result of subsidiaries and participations 398.1 674.5 Net profit 300.9 571.0
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Company Financial Statements 208 Notes to the Company Financial Statements
Note 1. General Note 2. Participating interests in Group companies Koninklijke Vopak N.V. (Vopak) has its registered office in Rotterdam, the Netherlands. Vopak is listed on the Euronext Amsterdam and is part of the AMX index. Vopak is the world's leading independent tank In EUR millions 2020 2019 storage provider, specialized in the storage and handling of liquid chemicals, gases and oil products. Carrying amount at 31 December 2,004.7 2,004.9 Initial application IFRS 16 – - 85.1 The company is registered at the Company Registry of the Rotterdam Chamber of Commerce under Carrying amount at 1 January 2,004.7 1,919.8 number 24295332. Investments 130.9 50.5 FV change equity investment 1.9 – All amounts are presented in EUR million and have been rounded to the nearest EUR 100k, unless Dividends received - 209.1 - 640.3 otherwise stated. Other - 8.5 – - Exchange differences - 189.4 - 9.8 Accounting policies - Hedging 15.9 15.5 The Company financial statements have been drawn up in accordance with Dutch law (Part 9 of Book 2 - Remeasurements of defined benefit plans – - 5.5 of the Dutch Civil Code). In doing so, the company made use of the possibility to apply the accounting Other comprenhensive income from Participating interests in policies (including the policies for the presentation of financial instruments as equity or loan capital) used Group Companies - 173.5 0.2 in the Consolidated financial statements to the Company financial statements, as provided for in Profit 398.1 674.5 Section 362 (8) of Book 2 of the Dutch Civil Code. Carrying amount at 31 December 2,144.5 2,004.7
The accounting policies applied in the Company financial statements are the same as those applied in The majority of 2020 dividend relates to settlement of intra-group positions by intra-group dividends the Consolidated financial statements, unless stated otherwise. (upstreaming of dividends).
Participating interests in Group companies For an overview of the investments in subsidiaries, joint ventures and associates held (indirectly) by the Interests in Group companies and other companies over which Vopak exercises control or which it company, reference is made to note 9.11 of the Consolidated financial statements. manages are carried at net asset value. The net asset value is determined by measuring the assets, provisions and liabilities and calculating the result according to the accounting policies applied in the Note 3. Loans granted Consolidated financial statements. In EUR millions 2020 2019 Carrying amount at 1 January 2,486.5 2,233.8 Loans granted 421.9 974.6 Repayments - 471.2 - 721.9 Carrying amount at 31 December 2,437.2 2,486.5
Loans granted mainly related to various loans to subsidiaries. At 31 December 2020 loans granted did not include any subordinated loans (2019: nil).
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Company Financial Statements 209
Note 4. Shareholders’ equity Unappropriated profit Reference is made to note 5.1 to the Consolidated Financial Statements for movements in the number of shares, share capital and share premium. In EUR millions 2020 2019 Carrying amount at 1 January 571.0 254.5 The share premium can be distributed in full, free of tax. Profit appropriation to Other reserves - 424.9 - 114.0 Dividend in cash - 146.1 - 140.5 For the translation reserve, the revaluation reserve derivatives the revaluation reserve assets and the Profit for the year 300.9 571.0 transaction reserve of non-controlling interests (NCI), reference is made to note 5.2 to the Consolidated Carrying amount at 31 December 300.9 571.0 Financial Statements. After adjustment for the legal reserves at 31 December 2020, a total of EUR 2,197.6 million Movements in the remaining components of shareholders’ equity for the years presented are shown in (2019: EUR 2,305.7 million) is freely distributable from reserves, including the following tables. unappropriated profit for the year.
Legal reserve for participating interests Note 5. Interest-bearing loans
In EUR millions 2020 2019 Nominal value in > 5 years in Average Average interest EUR millions EUR millions term in years in % Carrying amount at 1 January 383.8 306.9 Dotation from Other reserves 20.2 76.9 2020 2019 2020 2019 2020 2019 2020 2019 Carrying amount at 31 December 404.0 383.8 Current portion 121.2 180.0 – Non-current portion 1,485.0 1,287.2 818.6 721.5 Other reserves Total 1,606.2 1,467.2 818.6 721.5 7. 2 6.3 3.5 3.9
In EUR millions 2020 2019 Carrying amount at 31 December 1,940.1 1,987.6 Initial application IFRS 16 – - 85.1 Carrying amount at 1 January 1,940.1 1,902.5 Profit appropriation from Unappropriated profit 424.9 114.0 Remeasurement of defined benefit plans – - 5.5 Measurement of equity-settled share-based payment arrangements 4.5 8.6 Purchase treasury shares - 8.0 - 2.6 Share buyback -99.1 – Vested shares under equity-settled share-based payment arrangements - 2.1 – Actuarial Reserve - 5.3 – Other 4.8 – Release to Legal reserves - 20.2 - 76.9 Carrying amount at 31 December 2,239.6 1,940.1
The other reserves as presented in the Company Statement of Financial Positions includes a legal reserve for internally developed intangibles of EUR 104.0 million (2019: EUR 79.9 million).
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Company Financial Statements 210
Note 6. Derivative financial instruments
31 December 2020 31 December 2019
Notional Notional In EUR millions Maturity Assets1 Liabilities1 amount Assets1 Liabilities1 amount Forward foreign currency contracts2 < 1 year 1. 4 – 137.4 0.1 0.2 142.4 Total net investment hedges 1.4 – 137.4 0.1 0.2 142.4
Cross-currency interest rate swaps3 < 1 year – – – 29.0 24.9 209.2 Cross-currency interest rate swaps3 1-5 years 9.1 – 307.3 31.8 12.3 209.6 Cross-currency interest rate swaps3 > 5 years – 5.4 66.6 – – – Total cash flow hedges - currency part 9.1 5.4 373.9 60.8 37.2 418.8
Forward foreign currency contracts < 1 year – 7. 1 205.4 0.1 0.8 192.0 Total derivatives no hedge accounting – 7. 1 205.4 0.1 0.8 192.0
Total derivative financial instruments 10.5 12.5 716.7 61.0 38.2 753.2
Offsetting – – - 13.6 - 13.6 Total 10.5 12.5 47.4 24.6
Non-current 9.1 5.4 19.4 – Current 1. 4 7. 1 28.0 24.6 Total 10.5 12.5 47.4 24.6 1 At fair value. 2 Forward foreign currency contracts accounted for as hedges on net investments. 3 Cross currency interest swaps accounted for as cash flow hedges are used to hedge currency (2020: USD 468 million; 2019: USD 486 million and JPY 5 billion) on fixed debt denominated in foreign currency. 4 Interest part of long-term cross currency interest rate swaps entered into in the past for variable interest loans, currently no longer present.
Note 7. Pension and other employee benefits provisions Note 8. Personnel expenses During the year under review, the company employed an average of 170 employees and temporary staff In EUR millions 2020 2019 (in FTEs) (2019: 156). Net pension obligations under defined contribution plans – 0.8 Net pension obligations recognized at 31 December – 0.8 In EUR millions 2020 2019 Wages and salaries 26.6 21.8 Non-current liabilities – – Social security charges 1. 7 1. 6 Current liabilities – 0.8 Contribution to pension schemes (defined contribution) 4.3 3.2 Net pension obligations recognized at 31 December – 0.8 Long-term incentive plans 2.3 3.5 Other personnel expenses 9.1 2.8 Reference is made to note 9.4 Pensions and other employee benefits which contains further information Recharged to group companies - 6.0 0.7 on pensions and other employee benefits of the Netherlands. Total 38.0 33.6
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Company Financial Statements 211
Note 9. Income taxes Note 11. Contingent liabilities Royal Vopak is the head of a corporate income tax fiscal unity which includes almost all Dutch Guarantees and security provided on behalf of participating interests and third parties amounted to wholly-owned subsidiaries. The company is therefore jointly and severally liable for the tax liabilities EUR 109.7 million (2019: EUR 119.9 million). Guarantees and security provided on behalf of Group of the fiscal unity as a whole. The tax expense of Royal Vopak represents the tax impact of its share companies amounted to EUR 50.2 million (2019: EUR 43.7 million). in the taxable income of the fiscal unity based on Royal Vopak's earnings. Joint and several liability undertakings for an amount of EUR 80.0 million (2019: EUR 80.0 million) were In EUR millions 2020 2019 issued for bank credits granted to Royal Vopak. Furthermore, joint and several liability undertakings for an Result before income tax - 130.1 - 141.4 amount of EUR 41.5 million (2019: EUR 63.3 million) were issued for bank credits granted to subsidiaries. Income tax 32.9 37.9 Effective tax rate 25.3% 26.8% The company has filed joint and several liability undertakings (403 exemptions) for a number of its Dutch Group companies at the office of the Company Registry in whose area of jurisdiction the Group Composition: Amount % Amount % company concerned has its registered office. The list of interests filed at the office of the Company Weighted average statutory tax rate 32.5 25.0 35.4 25.0 Registry for inspection states for which Group companies Royal Vopak has issued joint and several Non-deductible expenses 0.7 0.5 1. 1 0.8 liability undertakings. Recognition of tax losses and tax credits - 0.3 - 0.2 1. 4 1. 0 Effective tax (rate) 32.9 25.3 37.9 26.8 The members of the Executive Board have signed the financial statements in order to comply with the The 2020 effective tax rate of 25.4% (2019: 26.8%) deviates slightly from the applicable tax rate of statutory obligation pursuant to article 2:101 paragraph 2 of the Dutch Civil Code and article 5:25c sub c 25.0% as a result of non-deductible expenses. of the Act on Financial Supervision (Wft).
Note 10. Remuneration of Supervisory Board members Rotterdam, 16 February 2021 and Executive Board members For the remuneration of the Supervisory Board members and the Executive Board members, reference The Executive Board is made to the section of the Remuneration report. E.M. Hoekstra - Chairman of the Executive Board and CEO F. Eulderink - Member of the Executive Board and COO G.B. Paulides - Member of the Executive Board and CFO
The Supervisory Board B.J. Noteboom (Chairman) M.F. Groot (Vice-chairman) L.J.I. Foufopoulos - De Ridder N. Giadrossi B. van der Veer R.G.M. Zwitserloot
Vopak Annual Report 2020 Executive Board declaration Executive Board declaration
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Executive Board declaration 212
Executive Board declaration Executive Board declaration In view of all of the above, the Executive Board confirms that, to the best of its knowledge, the financial In-control statement statements give a true and fair view of the assets, liabilities, financial position and profit or loss of the In the ‘Internal control and risk management’ paragraph, we set out in detail our risks and risk Group, and the management report (‘bestuursverslag’) in this Annual Report includes a fair review of management framework, as well as the responsibilities of the Executive Board. the position at the balance sheet date and the development and performance of the business during the financial year, together with a description of the principal risks and uncertainties that the company faces. The Executive Board is responsible for the design and operation of the internal risk management and control systems and processes. In discharging this responsibility, the Executive Board has made an Rotterdam, 16 February 2021 assessment of the effectiveness of the design and operation of the internal control and risk management systems and processes. The Executive Board concluded, on the basis of such assessment, The Executive Board that the internal risk management and control systems and processes are operating adequately. E.M. Hoekstra - Chairman of the Executive Board and CEO F. Eulderink - Member of the Executive Board and COO On the basis of this report and in accordance with best practice 1.4.3 of the G.B. Paulides - Member of the Executive Board and CFO Dutch corporate governance code of December 2016, and Article 5:25c of the Financial Supervision Act, the aforementioned assessment, the current state of affairs and to the best of its knowledge and belief, the Executive Board confirms that: • the internal risk management and control systems and processes of the Group provide reasonable assurance that the financial statements give a true and fair view of the Group’s financial position, profit or loss, and cash flows; • there have been no material failings in the effectiveness of the internal risk management and control systems and processes of the Group; • this report states those material risks and uncertainties that are relevant to the expectation of the continuity of the Group's operations in the coming twelve months; and • there is a reasonable expectation that the Group will be able to continue its operations and meet its liabilities for at least twelve months, therefore, it is appropriate to adopt the going concern basis in preparing the financial statements.
Please note that our internal risk management and control systems and processes are unable to offer absolute assurance that the strategic, operational and financial objectives will be fully achieved, or that laws and regulations are always complied with. Furthermore, the systems and processes cannot prevent all human errors of judgments and mistakes. It is also inherent that in business, cost-benefit assessments must be made for the acceptance of risks and the implementation of controls. We continuously monitor the effectiveness of our internal risk management and control systems and processes, and when needed these are further improved and optimized.
Vopak Annual Report 2020 External auditor’s reports External auditor’s reports
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
214 Independent auditor’s report 220 Assurance report of the independent auditor with respect to the 2020 Sustainability Information of Koninklijke Vopak N.V.
External auditor’s reports
Vopak AnnualAnnual ReportReport 20202020 Independent auditor’s report
Independent auditor’s report Independent auditor’s report
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Independent auditor’s report 214
Independent auditor’s report We are independent of Koninklijke Vopak N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the ‘Wet toezicht To the shareholders Supervisory Board of Koninklijke Vopak N.V. accountantsorganisaties’ (Wta, Audit firms supervision act), the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional Accountants, a Report on the audit of the financial statements 2020 included regulation with respect to independence) and other relevant independence regulations in The in annual report Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels Our Opinion accountants’ (VGBA, Dutch Code of Ethics). We have audited the accompanying financial statements 2020 of Koninklijke Vopak N.V. (“company” or “group”), based in Rotterdam, The Netherlands. The financial statements include the Consolidated We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis Financial Statements and the Company Financial Statements. for our opinion.
In our opinion: Materiality • The accompanying Consolidated Financial Statements included in the Annual Report give a true and Based on our professional judgement we determined the materiality for the financial statements as a fair view of the financial position of Koninklijke Vopak N.V. as at 31 December 2020, and of its result whole at EUR 20 million (2019: EUR 22 million). The materiality is based on 5% of profit before income and its cash flows for 2020 in accordance with International Financial Reporting Standards as adopted tax, adjusted for certain non-recurring items. We have also taken into account misstatements and/or by the European Union (“EU-IFRS”) and with Part 9 of Book 2 of the Dutch Civil Code. possible misstatements that in our opinion are material for the users of the financial statements for • The accompanying Company Financial Statements included in the Annual Report give a true and fair qualitative reasons. view of the financial position of Koninklijke Vopak N.V. as at 31 December 2020, and of its result for 2020 in accordance with Part 9 of Book 2 of the Dutch Civil Code. Component audits are performed using the materiality levels determined by the judgement of the group engagement team, considering materiality for the consolidated financial statements as a whole The Consolidated Financial Statements comprise: and the reporting structure of the group. For the largest reporting entities the audits are performed • The Consolidated Statement of Financial Position as at 31 December 2020. using the following component materialities: Netherlands of EUR 8.6 million (2019: EUR 8.6 million), • The following statements for 2020: the Consolidated Statement of Income, Comprehensive Income, Singapore of EUR 7.2 million (2019: 7.2 million) and the United States of America of EUR 7.9 million Changes in Equity and Cash Flows. (2019: EUR 7.9 million). For the other reporting entities the component materiality did not exceed • The notes comprising a summary of the significant accounting policies and other explanatory information. EUR 7.2 million (2019: EUR 7.2 million) and for the majority of the components, materiality is significantly less than this amount. The Company Financial Statements comprise: • The Company Statement of Financial Position before Profit Appropriation as at 31 December 2020. We agreed with the Supervisory Board that uncorrected misstatements in excess of EUR 1.0 million • The Company Statement of Income for 2020. (2019: EUR 1.1 million), which are identified during the audit, would be reported to them, as well as • The notes comprising a summary of the accounting policies and other explanatory information. smaller misstatements that in our view must be reported on qualitative grounds.
Basis for our opinion Scope of the group audit We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Koninklijke Vopak N.V. is at the head of a group of entities. The financial information of this group is Our responsibilities under those standards are further described in the ‘Our responsibilities for the audit included in the Consolidated Financial Statements of Koninklijke Vopak N.V. of the financial statements’ section of our report. Because we are ultimately responsible for the opinion, we are responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for reporting entities. Decisive were the size and/or the risk profile of the reporting entities or operations. On this basis, we selected reporting entities for which an audit had to be carried out on the complete set of financial information or specific items.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Independent auditor’s report 215
The group’s financial statements are a combination of: In addition, we performed other procedures with respect to the remaining reporting entities. • Consolidated reporting entities, comprising the operating terminals under the group’s control and centralized functions. The group consolidation, financial statements disclosures and a number of complex items were audited • Unconsolidated reporting entities comprised of operating terminals under joint control with unrelated by the group engagement team. These include impairment testing of terminal assets and joint ventures, parties (joint ventures) and operating terminals where the group exercises significant influence general IT controls, derivative financial instruments, hedge accounting and share-based payments. (associates); all accounted for under the equity method. Specialists were involved among others in the areas of treasury, information technology, tax, accounting, pensions and valuation. Due to the COVID-19 travel restrictions during 2020 we were not able to execute In establishing the overall group audit strategy and plan, we determined the type of work that needed the tentatively planned visits to (un)consolidated reporting entities. Consequently, we revised our to be performed at the reporting entities by the group engagement team, by component auditors from strategy for direction and supervision of the component auditors. The group engagement team among other Deloitte network firms and by component auditors from non-Deloitte network firms primarily others held audit planning calls with all the individual component auditors and participated at a minimum working under our instruction at the joint ventures. Where the work was performed by component in the component auditor closing calls. For selected component auditors we conducted remote file auditors, we determined the level of involvement we needed to have in the audit work at those reporting reviews to evaluate the work undertaken and to assess their findings. entities so as to be able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the group financial statements as a whole. For each reporting entity we By performing the procedures mentioned above at reporting entities, together with additional determined whether we required an audit of their complete financial information or whether other procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about procedures would be sufficient. the group’s financial information to provide an opinion about the Consolidated Financial Statements.
Those where a full audit was required included the three largest (consolidated) reporting entities Our key audit matters (Netherlands, Singapore and United States of America), because they each make up more than 10% Key audit matters are those matters that, in our professional judgement, were of most significance in of the group’s revenue or underlying profits. We included additional reporting entities in the scope of our audit of the financial statements. We have communicated the key audit matters to the Supervisory our group audit to have audit coverage on the group’s consolidated financial statements and to cover Board. The key audit matters are not a comprehensive reflection of all matters discussed. The key audit a geographic spread across the group’s divisions. matters are consistent with these identified in the prior year with the exclusion of the Company’s implementation of IFRS 16 ‘Leases’ as per 1 January 2019. Audit coverage These matters were addressed in the context of our audit of the financial statements as a whole and • Audit coverage of consolidated revenues: 89% in forming our opinion thereon, and we do not provide a separate opinion on these matters. • Audit coverage of group operating profit: 86% • Audit coverage of total assets: 83%
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Independent auditor’s report 216
Impairment testing of terminal assets and joint ventures
Description Our response Our observations The group controls a number of tank storage terminals with a total carrying Our impairment testing included, among others, evaluating the group’s As described in note 3.8 of the financial statements, the group recognized value of owned property, plant and equipment of EUR 3,798.9 million as policies and procedures, including internal controls, to identify triggering an impairment of EUR 42.9 million and recognized an impairment reversal per 31 December 2020 (note 3.3). Furthermore, the group has an interest events for potential impairment of terminal assets and joint ventures of EUR 12.8 million in 2020. in a number of joint ventures and associates, with a total carrying value and associates. The group has provided disclosures for its key accounting estimates of EUR 1,319.4 million as per 31 December 2020 (note 3.5). in note 3.8 of the financial statements which include disclosures of: For the terminal locations that triggered management’s impairment testing, This area is significant to our audit as the determination whether these we evaluated the policies and procedures regarding impairment testing, we • The impairment recognized on Vopak Bahia las Minas terminal – Panama; assets are not carried at more than their recoverable amounts is subject to challenged management’s primary cash flow assumptions and corroborated • The impairment reversal recognized on Vopak Terminals of Canada significant management judgment. Such judgment focuses predominantly them by comparison to commercial contracts, customer relationship – Quebec City; on future cash flows, which are, among others, dependent on economic management information, available market reports, historic trend analyses or • The uncertainties with respect to the recoverable value of the group’s conditions (including the impact of COVID-19), the continued attractiveness market multiples from recent tank terminal sales transactions in the region, other investments. of the terminal location for users along the major shipping routes and local taking into account the impact of COVID-19 on current and future cash flows. market circumstances and is inherently surrounded by uncertainties. We did not identify any material reportable matters in management’s Further, we involved our valuation experts to validate the weighted average assesment of the recoverability of terminal assets and joint ventures cost of capital as applied by the group and the appropriateness of certain and the corresponding disclosures in note 3.8. assumptions in the applied value in use calculations or, where applicable, the fair value less cost of disposal calculations. By nature, the assumptions applied in measuring the recoverable amount are subject to developments and change in later periods. This We further assessed whether the main assumptions and related could potentially lead to (reversal of) impairments of individual terminals uncertainties are appropriately reflected in the disclosures in the financial going forward. statements.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Independent auditor’s report 217
Report on the other information included in annual report Management is responsible for preparing the Annual Report including the financial statements in In addition to the financial statements and our auditor’s report thereon, the Annual Report contains accordance with the RTS on ESEF, whereby management combines the various components in a other information that consists of: reporting package. Our responsibility is to obtain reasonable assurance for our conclusion whether the • Management report. Annual Report in this reporting package, is in accordance with the requirements. We have taken into • Supervisory Board report. consideration what is stated in Alert 43. • Remuneration report. • Other information as required by Part 9 of Book 2 of the Dutch Civil Code. Our procedures included: • Obtaining an understanding of the entity’s financial reporting process, including the preparation of the Based on the following procedures performed, we conclude that the other information: reporting package; • Is consistent with the financial statements and does not contain material misstatements. • Obtaining the reporting package and performing validations to determine whether the reporting • Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code. package containing the Inline XBRL instance document and the XBRL extension taxonomy files have been prepared in accordance with the technical specifications; and We have read the other information. Based on our knowledge and understanding obtained through • Examining the information related to the Consolidated Financial Statements in the reporting package our audit of the financial statements or otherwise, we have considered whether the other information to determine whether all required tagging has been applied and whether they are in accordance with contains material misstatements. the RTS on ESEF.
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil No prohibited non-audit services Code and the Dutch Standard on Auditing 720. The scope of the procedures performed is substantially We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation less than the scope of those performed in our audit of the financial statements. on specific requirements regarding statutory audit of public-interest entities.
Management is responsible for the preparation of the other information, including the management Description of responsibilities regarding the financial statements report in accordance with Part 9 of Book 2 of the Dutch Civil Code, and the other information as required Responsibilities of management Supervisory Board for the financial by Part 9 of Book 2 of the Dutch Civil Code. statements Management is responsible for the preparation and fair presentation of the financial statements in Report on other legal and regulatory requirements accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is Engagement responsible for such internal control as management determines is necessary to enable the preparation We were engaged by the Annual General Meeting as auditor of Koninklijke Vopak N.V. on 23 April 2014 of the financial statements that are free from material misstatement, whether due to fraud or error. as of the audit for the year 2015 and have operated as statutory auditor ever since that financial year. As part of the preparation of the financial statements, management is responsible for assessing European Single Electronic Format (“ESEF”) the company’s ability to continue as a going concern. Based on the financial reporting frameworks In the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive mentioned, management should prepare the financial statements using the going concern basis 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards of accounting unless management either intends to liquidate the company or to cease operations, on the specification of a single electronic reporting format is regulated that the Annual Report of the or has no realistic alternative but to do so. Company has to be prepared in a single electronic reporting format (“ESEF”). The requirements to be met are set out in the aforementioned delegated regulation (these requirements are hereinafter referred Management should disclose events and circumstances that may cast significant doubt on the to as: the RTS on ESEF). company’s ability to continue as a going concern in the financial statements.
In our opinion, the Annual Report made up in XHTML format, including the partly tagged Consolidated The Supervisory Board is responsible for overseeing the company’s financial reporting process. Financial Statements as included in the reporting package by the Company, has been prepared in all material respects in accordance with the RTS on ESEF.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Independent auditor’s report 218
Our responsibilities for the audit of the financial statements Misstatements can arise from fraud or error and are considered material if, individually or in the Our objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient aggregate, they could reasonably be expected to influence the economic decisions of users taken and appropriate audit evidence for our opinion. on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.
Consideration of fraud in the audit of financial statements
Description Our response An auditor conducting an audit in accordance with Dutch Standards on Auditing is We performed the following procedures: responsible for obtaining reasonable assurance that the financial statements taken • We made inquiries of management, those charged with governance and others within Vopak regarding the risk of material misstatements in as a whole are free from material misstatement, whether caused by fraud or error. the financial statements due to fraud, their process for identifying and responding to the risk of fraud, the internal communication regarding Owing to the inherent limitations of an audit, there is an unavoidable risk that some their views on business practices and ethical behavior and whether they have knowledge of any actual, suspected or alleged fraud affecting material misstatements of the financial statements may not be detected. The risk of the company. not detecting a material misstatement resulting from fraud is higher than for one • We obtained an understanding of how those charged with governance exercise oversight of management’s processes for identifying and resulting from error, as fraud may involve collusion, forgery, intentional omissions, responding to the risks of fraud in the company and the internal control that management has established to mitigate these risks. misrepresentations, or the override of internal control. • We evaluated whether unusual or unexpected relationships have been identified in performing analytical procedures, including those related to revenue accounts, that may indicate risks of material misstatement due to fraud. We have exercised professional judgement and have maintained professional • We held discussions amongst team members and component auditors to identify fraud risk factors and considered whether other skepticism throughout our audit in identifying and assessing the risks of material information obtained from our risk assessment procedures indicated risks of material misstatement due to fraud. misstatement of the financial statements due to fraud, designing and performing • We involved forensic specialists as part of our Fraud Focused Support Program, focused on our fraud and non-compliance risk assessment, audit procedures responsive to those risks, and obtaining audit evidence that is inquiries with management and the evaluation of the internal control environment. sufficient and appropriate to provide a basis for our opinion. • We determined overall responses to address the assessed risks of material misstatement due to fraud at the financial statement level or at the assertion level by: - assigning and supervising personnel with the adequate knowledge, skills and ability; - evaluating whether the selection and application of accounting policies by the group, particularly those related to subjective measurements and complex transactions, may be indicative of fraudulent financial reporting; - incorporated an element of unpredictability in the selection of the nature, timing and extent of our audit procedures. Among others, these include a periodical reassessment of the group audit scope, planning and audit findings meetings or video calls with auditors of reporting entities and expanding the group audit scope where appropriate. Reference is made to the section “Scope of the group audit”; - tested the appropriateness of journal entries recorded in the general ledger and other adjustments made in the preparation of the financial statements; - evaluated whether the judgments and decisions made by management in making the accounting estimates included in the financial statements indicate a possible bias that may represent a risk of material misstatement due to fraud. Management insights, estimates and assumptions that might have a major impact on the financial statements are disclosed in note 1.1 of the financial statements. Impairment testing of terminal assets and joint ventures is a significant area to our audit as the determination whether these assets are not carried at more than their recoverable amounts is subject to significant management judgment. Reference is made to the section “Our key audit matters”; - performed a retrospective review of management judgments and assumptions related to significant accounting estimates reflected in prior year financial statements; - for significant transactions evaluated whether the business rationale of the transactions suggests that they may have been entered into to engage in fraudulent financial reporting or to conceal misappropriation of assets.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Independent auditor’s report 219
Consideration of laws and regulations in the audit of financial statements
Description Our response We are responsible for obtaining reasonable assurance that the financial statements, We performed the following procedures: taken as a whole, are free from material misstatement, whether due to fraud or error • As part of obtaining an understanding of Vopak and its environment we obtained a general understanding of (i) the legal and regulatory taking into account the applicable legal and regulatory framework. However, we are framework applicable to Vopak and the industry in which it operates and (ii) how Vopak is complying with that framework. not responsible for preventing non-compliance and cannot be expected to detect • We obtained sufficient appropriate audit evidence regarding provisions of those laws and regulations generally recognized to have a direct non-compliance with all laws and regulations. effect on the determination of material amounts and disclosures in the financial statements such as (corporate) tax and pension laws and financial repoting regulations, the requirements under the International Financial Reporting Standards as adopted by the European Union Owing to the inherent limitations of an audit, there is an unavoidable risk that some (EU-IFRS) and Part 9 of Book 2 of the Dutch Civil Code. material misstatements in the financial statements may not be detected, even • Our procedures are more limited with respect to other laws and regulations that do not have a direct effect on the determination of the though the audit is properly planned and performed in accordance with the auditing amounts and disclosures in the financial statements. These laws and regulations compliance may be fundamental to the operating aspects standards. In the context of laws and regulations, the potential effects of inherent of the business, to Vopak’s ability to continue its business, or to avoid material penalties (e.g., compliance with the terms of operating limitations on the auditor’s ability to detect material misstatements are greater for licenses and permits or compliance with environmental regulations) and therefore non-compliance with such laws and regulations may such reasons as the following: have a material effect on the financial statements. In addition, we considered major laws and regulations applicable to listed companies. Our responsibility is limited to undertaking specified audit procedures to help identify non-compliance with those laws and regulations • There are many laws and regulations, relating principally to the operating aspects that may have a material effect on the financial statements. of an entity, that typically do not affect the financial statements and are not • Our procedures are limited to (i) inquiry of management, the Supervisory Board and others within Vopak as to whether the company is in captured by the entity’s information systems relevant to financial reporting. compliance with such laws and regulations and (ii) inspecting correspondence, if any, with the relevant licensing or regulatory authorities • Non-compliance may involve conduct designed to conceal it, such as collusion, to help identify non-compliance with those laws and regulations that may have a material effect on the financial statements. forgery, deliberate failure to record transactions, management override of controls • Naturally, we remained alert to the indications of (suspected) non-compliance throughout the audit. or intentional misrepresentations being made to the auditor. • Finally, we obtained written representations that all known instances of (suspected) fraud or non-compliance with laws and regulations • Whether an act constitutes non-compliance is ultimately a matter to be have been disclosed to us. determined by a court or other appropriate adjudicative body.
Ordinarily, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognize the non-compliance.
For an overview of our responsibilities we refer to NBA’s website.
Rotterdam, 16 February 2021
Deloitte Accountants B.V. Signed on the original: M.J. van der Vegte
Vopak Annual Report 2020 Assurance report of the independent auditor with respect to the 2020 Sustainability Information of Koninklijke Vopak N.V. Assurance report of the independent auditor Assurance report of the independent auditor with respect to the 2020 Sustainability Information of Koninklijke Vopak N.V.
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Assurance report of the independent auditor 220 Assurance report of the independent auditor with respect to the 2020 Sustainability Information of Koninklijke Vopak N.V.
To the shareholders and Supervisory Board of Koninklijke Vopak N.V. Reporting criteria The sustainability information needs to be read and understood together with the reporting criteria. Our conclusion Koninklijke Vopak N.V. is solely responsible for selecting and applying these reporting criteria, taking We have reviewed the 2020 Sustainability Information included in the chapter ‘Sustainability’ in the 2020 into account applicable law and regulations related to reporting. Annual Report (“the sustainability information”) of Koninklijke Vopak N.V. at Rotterdam. A review is aimed at obtaining a limited level of assurance. The reporting criteria used for the preparation of the sustainability information are the Sustainability Reporting Standards of the Global Reporting Initiative (GRI) and the applied supplemental reporting Based on our procedures performed nothing has come to our attention that causes us to believe that criteria as disclosed in the chapter ‘Sustainability, Basis of preparation’ of the 2020 Annual Report. the sustainability information does not present, in all material respects, a reliable and adequate view of: • The policy and business operations with regard to sustainability; and The absence of an established practice on which to draw, to evaluate and measure non-financial • the thereto related events and achievements for the year 2020 information allows for different, but acceptable, measurement techniques and can affect comparability in accordance with the reporting criteria as included in the section ‘Reporting criteria’. between entities and over time.
The sustainability information consists of the performance information in the chapter ‘Sustainability’ Limitations to the scope of our review in the 2020 Annual Report. The sustainability information includes prospective information such as ambitions, strategy, plans, expectations and estimates. Inherent to prospective information, the actual future results are uncertain. Basis for our conclusion We do not provide any assurance on the assumptions and achievability of prospective information in We have performed our review on the sustainability information in accordance with Dutch law, the sustainability information. including Dutch Standard 3810N ‘Assurance-opdrachten inzake maatschappelijke verslagen’ (Assurance engagements relating to sustainability reports) which is a specified Dutch Standard that is based on The references to external sources or websites in the sustainability information are not part of the the International Standard on Assurance Engagements (ISAE) 3000 ‘Assurance Engagements other sustainability information as reviewed by us. We therefore do not provide assurance on this information. than Audits or Reviews of Historical Financial Information’. This assurance engagement is aimed at obtaining limited assurance. Our responsibilities under this standard are further described in the Responsibilities of management and the Supervisory Board for section ‘Our responsibilities for the review of the sustainability information’. the sustainability information The Management Board is responsible for the preparation of the sustainability information in accordance We are independent of Koninklijke Vopak N.V. in accordance with the ‘Verordening inzake de with reporting criteria as included in the section ‘Basis of preparation’ as disclosed in the chapter onafhankelijkheid van accountants bij assurance-opdrachten’ (ViO, Code of Ethics for Professional ‘Sustainability’, including the identification of stakeholders and the definition of material matters. Accountants, a regulation with respect to independence) and other relevant independence regulations The choices made by the Management Board regarding the scope of the sustainability information in The Netherlands. This includes that we do not perform any activities that could result in a conflict and the reporting policy are summarised in the chapter ‘Sustainability’ of the Annual Report. of interest with our independent assurance engagement. Furthermore we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics). The Management Board is also responsible for such internal control as the Management Board determines is necessary to enable the preparation of the sustainability information that is free We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis from material misstatement, whether due to fraud or error. for our conclusion. The Supervisory Board is responsible for overseeing the reporting process of Koninklijke Vopak N.V.
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Assurance report of the independent auditor 221
Our responsibilities for the review of the sustainability information • Designing and performing further assurance procedures aimed at determining the plausibility of the Our responsibility is to plan and perform the review in a manner that allows us to obtain sufficient sustainability information responsive to this risk analysis. These procedures consisted amongst others of: and appropriate evidence to provide a basis for our conclusion. • Interviewing management (and/or relevant staff) at corporate (and business/division/cluster/local) level responsible for the sustainability strategy, policy and results; Procedures performed to obtain a limited level of assurance are aimed to determine the plausibility of • Interviewing relevant staff responsible for providing the information for, carrying out internal information and vary in nature and timing from, and are less in extent, than for a reasonable assurance control procedures on, and consolidating the data in the sustainability information; engagement. The level of assurance obtained in review is therefore substantially less than the assurance • Determining the nature and extent of the review procedures for the group components and locations. obtained in an audit. For this, the nature, extent and/or risk profile of these components are decisive. Based thereon we selected the components and terminals to visit. Due to the COVID-19 travel restrictions during 2020 Misstatements can arise from fraud or errors and are considered material if, individually or in the we were not able to execute the tentatively planned visits to (un)consolidated reporting entities. aggregate, they could reasonably be expected to influence the decisions of users taken on the basis Consequently, we revised our strategy for direction and supervision of the component auditors. of the sustainability information. The materiality affects the nature, timing and extent of our review The group engagement team among others held audit planning calls with all the individual procedures and the evaluation of the effect of identified misstatements on our conclusion. component auditors and participated at a minimum in the component auditor closing calls. For selected component auditors we conducted remote file reviews to evaluate the work undertaken We apply the ‘Nadere voorschriften kwaliteitssystemen)’ (NVKS, regulations for quality management and to assess their findings. The visits to terminals are aimed at, on a local level, validating source systems) and accordingly maintain a comprehensive system of quality control including documented data and evaluating the design and implementation of internal controls and validation procedures; policies and procedures regarding compliance with ethical requirements, professional standards and - Obtaining assurance information that the sustainability information reconciles with underlying other relevant legal and regulatory requirements. records of the company; - Reviewing, on a limited test basis, relevant internal and external documentation; We have exercised professional judgement and have maintained professional scepticism throughout - Performing an analytical review of the data and trends. the review, in accordance with the Dutch Standard 3810N, ethical requirements and independence • Evaluating the consistency of the sustainability information with the information in the Annual Report requirements. which is not included in the scope of our review. • Evaluating the presentation, structure and content of the sustainability information; Our review included among others: • Considering whether the sustainability information as a whole, including the disclosures, reflects the • Performing an analysis of the external environment and obtaining an understanding of relevant social purpose of the reporting criteria used. themes and issues, and the characteristics of the company. • Assessing whether the sustainability information has been prepared in accordance with the • Evaluating the appropriateness of the reporting policy and its consistent application, including the Sustainability Reporting Standards Comprehensive option of the Global Reporting Initiative. evaluation of the results of the stakeholders’ dialog and the reasonableness of management’s estimates. • Obtaining an understanding of the reporting processes for the sustainability information, including We communicated with the Management and Supervisory Board regarding, among other matters, the obtaining a general understanding of internal control relevant to our review. planned scope, timing and outcome of the review and significant findings that we identified during our review. • Identifying areas of the sustainability information with a higher risk of misleading or unbalanced information or material misstatements, whether due to fraud or error. Rotterdam, 16 February 2021
Deloitte Accountants B.V. Signed on the original: M.J. van der Vegte
Vopak Annual Report 2020 Additional information Additional information
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
223 Non-IFRS proportional financial information (unaudited) 226 Profit Appropriation 227 Stichting Vopak (Vopak Foundation) 228 Five-year consolidated summary 229 Glossary 231 Contact details
Additional information
Vopak Annual Report 2020 Non-IFRS proportional financial information (unaudited) Non-IFRS proportional financial information (unaudited)
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Non-IFRS proportional financial information (unaudited) 223 Non-IFRS proportional financial information (unaudited)
Proportional information Basis of preparation Vopak provides Non-IFRS proportional financial information -excluding exceptional items- in response to In the tables in this section, we provide the proportional financial information for the statement of requests by multiple investors to provide additional operational performance insights on a comparable income, the statement of financial position, and the segment information for each of our reportable basis for subsidiaries, joint ventures and associates. In this disclosure, the joint ventures and associates segments. Where applicable, we show a reconciliation with our IFRS figures in order to create and the subsidiaries with non-controlling interests are consolidated based on the economic ownership comparability with the proportional information. Other information is based on the same principles interests of the Group in these entities. as applied for the proportional financial information.
Statement of income
2020 2019
Exclusion Effects Exclusion Effects exceptional proportional Proportional exceptional proportional Proportional In EUR millions IFRS figures items consolidation consolidated IFRS figures items consolidation consolidated Revenues 1,190.0 – 407.4 1,597.4 1,252.6 – 400.5 1,653.1 Other operating income 60.0 33.0 41.0 68.0 276.5 243.1 30.3 63.7 Operating expenses - 591.7 - 0.2 - 101.6 - 693.1 - 635.2 - 2.5 - 103.4 - 736.1 Result joint ventures and associates 161.2 - 4.8 - 166.0 – 161.8 - 14.7 - 176.5 – Impairment - 30.1 - 30.1 – – - 17.2 - 17.2 – – Group operating profit before depreciation and amortization (EBITDA) 789.4 - 2.1 180.8 972.3 1,038.5 208.7 150.9 980.7 Depreciation and amortization - 299.5 – - 107.6 - 407.1 - 290.7 – - 99.3 - 390.0 Group operating profit (EBIT) 489.9 - 2.1 73.2 565.2 747.8 208.7 51.6 590.7 Net finance costs - 86.3 – - 55.1 - 141.4 - 85.7 1. 8 - 41.7 - 129.2 Income tax - 73.1 - 2.8 - 47.7 - 118.0 - 58.3 2.7 - 42.7 - 103.7 Net profit 330.5 - 4.9 - 29.6 305.8 603.8 213.2 - 32.8 357.8 Non-controlling interests - 29.6 – 29.6 – - 32.8 – 32.8 – Net profit owners of parent 300.9 - 4.9 – 305.8 571.0 213.2 – 357.8
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Non-IFRS proportional financial information (unaudited) 224
Statement of financial position
31-Dec-20 31-Dec-19
Effects Effects proportional Proportional proportional Proportional In EUR millions IFRS figures consolidation consolidated IFRS figures consolidation consolidated Non-current assets (excl. joint ventures and associates) 4,812.4 2,363.9 7,176.3 4,510.4 2,222.2 6,732.6 Joint ventures and associates 1,319.4 - 1,319.4 – 1,272.8 - 1,272.8 – Current assets 386.1 447.7 833.8 590.3 504.7 1,095.0 Total assets 6,517.9 1,492.2 8,010.1 6,373.5 1,454.1 7,827.6
Non-current liabilities 2,559.0 1,323.0 3,882.0 2,209.8 1,342.4 3,552.2 Current liabilities 833.3 314.1 1,147.4 968.6 259.5 1,228.1 Total liabilities 3,392.3 1,637.1 5,029.4 3,178.4 1,601.9 4,780.3
Equity attributable to owners of parent 2,980.7 – 2,980.7 3,047.3 – 3,047.3 Non-controlling interests 144.9 - 144.9 – 147.8 - 147.8 – Total equity 3,125.6 - 144.9 2,980.7 3,195.1 - 147.8 3,047.3
Other information
2020 2019 EBITDA margin -excluding exceptional items- 58.4% 57.1% Occupancy rate subsidiaries, joint ventures and associates 90.0% 84.0% Sustaining, service improvement and IT capex (in EUR million) 329.2 321.7
Net interest-bearing debt
In EUR millions 31-Dec-20 31-Dec-19 Non-current portion of interest-bearing loans 3,397.5 3,109.7 Current portion of interest-bearing loans 251.3 340.1 Total interest-bearing loans 3,648.8 3,449.8 Short-term borrowings 232.1 185.9 Bank overdrafts 9.3 6.5 Cash and cash equivalents - 269.7 - 362.0 Net interest-bearing debt 3,620.5 3,280.2
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Non-IFRS proportional financial information (unaudited) 225
Statement of income
Global functions of which Asia & of which China & of which and corporate Americas United States Middle East Singapore North Asia Europe & Africa Netherlands LNG activities Total
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Revenues 338.7 322.4 190.0 194.5 430.4 433.4 157.4 164.1 120.4 127.9 540.6 601.6 415.2 427.4 164.5 163.1 2.8 4.7 1,597.4 1,653.1 Other operating income 13.2 6.9 0.5 0.2 10.3 12.7 – 5.6 4.1 23.2 0.9 5.1 1. 2 2.9 39.5 15.1 – 0.7 68.0 63.7 Operating expenses - 163.7 - 165.2 - 89.7 - 93.4 - 121.1 - 119.5 - 45.0 - 46.2 - 37.6 - 50.6 - 265.4 - 305.1 - 198.4 - 206.4 - 54.4 - 45.4 - 50.9 - 50.3 - 693.1 - 736.1 EBITDA 188.2 164.1 100.8 101.3 319.6 326.6 112.4 123.5 86.9 100.5 276.1 301.6 218.0 223.9 149.6 132.8 - 48.1 - 44.9 972.3 980.7 Depreciation and amortization - 63.3 - 56.9 - 34.1 - 32.3 - 104.2 - 96.6 - 31.9 - 32.5 - 27.6 - 32.8 - 147.4 - 145.2 - 110.0 - 104.6 - 47.6 - 42.7 - 17.0 - 15.8 - 407.1 - 390.0 EBIT excluding exceptional items 124.9 107.2 66.7 69.0 215.4 230.0 80.5 91.0 59.3 67.7 128.7 156.4 108.0 119.3 102.0 90.1 - 65.1 - 60.7 565.2 590.7 Occupancy rate 92% 91% 91% 85% 89% 70% 88% 83% 97% 96% 90% 84% Net interest-bearing debt 3,620.5 3,280.2
Revenues per product type per reporting segment
Global functions and Americas Asia & Middle East China & North Asia Europe & Africa LNG corporate activities Total
In EUR millions 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Chemical products 157.2 167.2 180.4 194.7 99.4 103.5 193.5 189.4 – – – – 630.5 654.8 Oil products 123.7 99.4 213.5 199.2 0.6 3.0 234.7 296.6 – – – – 572.5 598.2 Vegoils and biofuels 36.6 32.5 2.0 3.2 – – 60.2 62.3 – – – – 98.8 98.0 Gas products 9.1 5.6 1 7. 3 1 7. 3 19.9 20.9 32.9 32.1 164.5 163.0 – – 243.7 238.9 Others 12.1 1 7. 7 1 7. 2 19.0 0.5 0.5 19.3 21.2 – 0.1 2.8 4.7 51.9 63.2 Total 338.7 322.4 430.4 433.4 120.4 127.9 540.6 601.6 164.5 163.1 2.8 4.7 1,597.4 1,653.1
Vopak Annual Report 2020 Profit Appropriation Profit Appropriation
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Profit Appropriation 226 Profit Appropriation
Articles of Association Provisions Governing Profit Appropriation The Articles of Association provisions governing profit appropriation are contained in Articles 19 and 27.
The relevant paragraphs of these articles are as follows:
Article 19.2. In the Annual General Meeting of Shareholders: b. the annual accounts as prepared by the management board will be presented to the general meeting for adoption and the allocation of profits will – with due observance of the provisions of article 27 – be determined.
Article 27.12. The profits remaining after application of the previous paragraphs shall be at the free disposal of the general meeting, with due observance of the fact that no dividend can be distributed when, at the time of the distribution, the dividend reserve finance preference shares has a positive balance and furthermore provided that no further distributions shall be made on the anti-takeover preference shares and the finance preference shares and no profits shall be (further) reserved for the account of the finance preference shares.
Proposed Profit Appropriation The proposal to the Annual General Meeting will be to distribute a dividend in cash of EUR 1.20 (2019: EUR 1.15 in cash) per ordinary share, with a nominal value of EUR 0.50. Provided that the Annual General Meeting adopts the financial statements, the dividend for the 2020 financial year will be made payable on 29 April 2021.
Vopak Annual Report 2020 Stichting Vopak (Vopak Foundation) Stichting Vopak (Vopak Foundation)
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Stichting Vopak (Vopak Foundation) 227
Stichting Vopak (Vopak Foundation) On 17 September 2013, the EGM resolved to increase the right of Stichting Vopak to acquire cumulative preference shares in such a way that the right to acquire cumulative preference shares is related to all The objectives of Stichting Vopak, established in Rotterdam, are to promote the interests of Koninklijke shares in the share capital of Vopak issued to third parties at such time, less one ordinary share. Vopak N.V. (Royal Vopak) and all those involved with the company and any of its affiliated companies in Pursuant to this Royal Vopak and Stichting Vopak amended on 17 September 2013 the option order to safeguard, among other things, Royal Vopak’s and these companies’ continuity and/or identity agreement accordingly. and/or independence. The Board of Stichting Vopak decides independently whether and when there is a need to exercise its During the year 2020, the Board of Stichting Vopak met twice. At these meetings, it discussed the option right for the issue of protective preference shares to Stichting Vopak. protection of Vopak and its effectiveness, the composition of the Board of Stichting Vopak as well as the financing of Stichting Vopak. Furthermore, the Board of Stichting Vopak was briefed by the Chairman of Rotterdam, 16 February 2021 the Executive Board of Royal Vopak on developments in the company. The Chairman of the Supervisory Board attended these meetings as an observer. Stichting Vopak
The current members of the Board of Stichting Vopak are: Declaration of independence • Mr. J.H.M. Lindenbergh, Chairman In the opinion of the Board of Stichting Vopak and the Executive Board of Royal Vopak, Stichting Vopak is • Mr. M.H. Muller independent as meant by Section 5:71(1c) of the Financial Supervision Act. • Mrs. A.P. Aris • Mr. J.C.M. Schönfeld Rotterdam, 16 February 2021
No cumulative preference shares in Royal Vopak had been issued at the date of the statement of Stichting Vopak Koninklijke Vopak N.V. (Royal Vopak) financial position.
Cumulative preference shares will be issued if Stichting Vopak exercises its option right. On 18 October 1999, the AGM decided to grant the right to Stichting Vopak to acquire protective preference shares to a maximum amount of the full nominal value of the share capital issued to third parties in the form of ordinary and financing preference shares, less the nominal value of one ordinary share. Royal Vopak and Stichting Vopak have specified their mutual relationship with regard to the option in an option agreement dated 1 November 1999, which was amended on 5 May 2004 in such a manner that the original put option granted to Royal Vopak was cancelled.
Vopak Annual Report 2020 Five-year consolidated summary Five-year consolidated summary
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Five-year consolidated summary 228 Five-year consolidated summary
In EUR millions 2020 20191 2018 2017 2016 Consolidated abridged statement of income Revenues 1,190 1,253 1,254 1,306 1,347 Other operating income 60 276 32 23 303 Total operating income 1,250 1,529 1,286 1,329 1,650 Operating expenses - 591 - 635 - 647 - 676 - 681 Depreciation and amortization - 300 - 291 - 273 - 273 - 264 Impairment - 30 - 17 2 - 2 - 6 Total operating expenses - 921 - 943 - 918 - 951 - 951 Operating profit 329 586 368 378 699 Result of joint ventures and associates 161 162 114 44 60 Group operating profit (EBIT) 490 748 482 422 759 Net finance costs - 86 - 86 - 133 - 122 - 107 Profit before income tax 404 662 349 300 652 Income tax - 73 - 58 - 58 - 25 - 72 Net profit 331 604 291 275 580 Non-controlling interests - 30 - 33 - 36 - 40 - 46 Net profit holders of ordinary shares 301 571 255 235 534 Consolidated abridged statement of income excluding exceptional items Operating profit 326 363 349 379 435 Result of joint ventures and associates 166 176 114 111 123 Group operating profit (EBIT) 492 539 463 490 558 Net finance costs - 86 - 87 - 82 - 98 - 107 Profit before income tax 406 452 381 392 451 Income tax - 70 - 61 - 55 - 65 - 79 Net profit 336 391 326 327 372 Non-controlling interests - 30 - 33 - 36 - 40 - 46 Net profit holders of ordinary shares 306 358 290 287 326 Consolidated abridged statement of financial position Intangible assets 173 165 156 149 146 Property, plant and equipment 4,431 4,144 3,736 3,488 3,553 Financial assets 1,476 1,418 1,146 1,019 1,138 Deferred tax 37 31 8 5 15 Other 15 25 47 41 122 Total non-current assets 6,132 5,783 5,093 4,702 4,974 Total current assets 386 590 422 413 608 Total assets 6,518 6,373 5,515 5,115 5,582 Total equity 3,126 3,195 2,844 2,636 2,559 Total non-current liabilities 2,559 2,240 2,060 1,978 2,453 Total current liabilities 833 938 611 501 570 Total liabilities 3,392 3,178 2,671 2,479 3,023 Total equity and liabilities 6,518 6,373 5,515 5,115 5,582 1 The Group has applied IFRS 16 per 1 January 2019 and the comparative figures are not revised.
Vopak Annual Report 2020 Glossary Glossary
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Glossary 229 Glossary
3YMP Cbm Damage ERM Three-Year Maintenance Program Cubic meter The loss of, impaired functioning, or impaired Enterprise Risk Management condition of anything (except people) which is AFM CCIRS considered to have some value, including Exceptional items Dutch Authority for Financial Markets Cross-currency interest rate swap company assets, the environment, and A limited set of events pre-defined by the third party losses company which are not reflective of the normal AGM Contamination business of the company and which are exceptional Annual General Meeting Any situation where a customer’s product is out DMCSA by nature from a management perspective. These of contract specification and cannot be used as Divisional Monitoring Controls Self-Assessment exceptional items include impairments, reversed API RP 754 intended or is reduced in value, or needs impairments, additions to and releases from American Petroleum Institute Recommended unplanned after treatment (e.g. mixing, blending, EBIT - Earnings Before Interest and Tax provisions for restructuring, results on acquisitions, Practice 754, Process Safety Performance sparging), due to the action of another substance Net income, before income taxes, and before net results on assets sold, gains on the sale of Indicators for the Refining and on that product and not classified as a process finance costs. This performance measure is used subsidiaries, joint ventures and associates, Petrochemical Industries safety contamination. A contamination is by the company to evaluate the operating any other provisions being formed or released independent of its financial loss performance of its operating entities and any significant change in estimates. Assure program Focuses on the prevention of major accidents and Contractor EBITDA - Earnings Before Interest, Tax, The Group does not apply a threshold for minimizing the consequences if such A contractor is any person who is not an Depreciation and Amortization impairments, reversal of impairments, acquisitions, accidents would occur. employee of Vopak but is providing contract-based Net income, before income taxes, before net disposal of investments and discontinued services to the Vopak company or one of its finance cost, and before amortization and operations. For the other items, the Group Audit Committee subsidiaries, joint ventures or associates either on depreciation expenses. EBITDA is a rough considers an event exceptional when the effect Committee within the Supervisory Board that assists Vopak premises or off the Vopak premises, where accounting approximate of gross cash flows exceeds the threshold of EUR 10.0 million. the Supervisory Board in performing the supervisory Vopak exercises supervisory or procedural control generated. This measure is used by the company tasks relating to matters such as, the integrity of to evaluate the financial performance of its FSRU the financial statements, the financial reporting, the Corporate Governance operating entities Floating Storage Regasification Unit internal audit procedures and the relationship with The manner in which the company is managed and the independence of the external auditors and the supervision of management is structured EGM FTE Extraordinary General Meeting of Shareholders Full-time Equivalent Brownfield COSO Expansion of an existing terminal Committee of Sponsoring Organizations of the Employee GHG Treadway Commission, an international An employee is any person who has a permanent Greenhouse gases Capex organization whose aim is to create a model for or temporary, written or unwritten employment Capital expenditure information on and management of business risks contract with a Vopak company or one of its Greenfield subsidiaries, joint ventures or associates Building a new terminal on undeveloped land Capital employed CRSA Total assets less current liabilities, excluding Control Risk Self-Assessment EPS GRI assets and current liabilities not related to Earnings Per Share Global Reporting Initiative (for more information operational activities visit www.globalreporting.org)
Vopak Annual Report 2020 Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Glossary 230
Gross assets / Gross capital employed LTIP N.R. ROE - Return On Equity After Interest and Tax Gross assets are based on the carrying amount of Long-term Incentive Plan Not reported Net income -excluding exceptional items- as a non-current assets, excluding loans granted, and percentage of the average equity employed. This are grossed up by means of adding back the LTIR OCI performance measure is used by the company accumulated depreciation, amortization and Lost Time Injury Rate; number of accidents Other comprehensive income to assess the return that the company generates impairment. Subsequently, the net trade working entailing absence from work per 200,000 hours with the equity funds provided by its shareholders capital (trade debtors minus trade creditors) is worked (of own personnel and contractors at Other information added. Balances related to assets under subsidiaries, joint ventures and associates) The ‘Other information’ (‘overige gegevens’), SDG construction are excluded from the gross assets. within the meaning of section 2:392 of the Dutch Sustainable Development Goal The average historical investment is based on the LTSP Civil Code, comprises the chapters Independent quarter-end balances in the measurement period Long-term Share Plan Auditor’s Report, the Profit Appropriation and SHE relevant to the quarter concerned Stichting Vopak Safety, Health and Environment Management Report
Hub The ‘Management Report’ (‘bestuursverslag’), PP SOx
Regional storage and transport center within the meaning of section 2:391 of the Dutch Private Placement, US Private Placement (USPP), SOx refers to all sulphur oxides, the two major
Civil Code, comprises the chapters CEO Asian Private Placement (APP) ones being sulphur dioxide (SO2) and
IAS Statement up to and including Internal Control sulphur trioxide (SO3) International Accounting Standards and Risk Management, with the exception of the PSER chapters Supervisory Board Members, Process safety incidents per 200,000 hours THA IFRS Supervisory Board Report and worked for own personnel and contractors Terminal Health Assessment International Financial Reporting Standards Remuneration Report Q.R. Throughput IPCC MLO Qualitative reporting Volume of a product handled by a terminal in a Intergovernmental Panel on Climate Change My Learning Operations given period, calculated as (in + out)/2 RCF IRS NCI Revolving Credit Facility TIR Interest Rate Swap Non-Controlling Interest Total number of injuries per 200,000 hours ROCE - Return On Capital Employed Before worked (own personnel) ISDA NGO Interest and Tax International Swaps and Derivatives Association Non-Governmental Organization EBIT -excluding exceptional items- as a percentage VOC of the average capital employed. This performance Volatile Organic Compound
ISPT NOx measure is used by the company to assess the
Institute for Sustainable Process Technology NOx is a generic term for mono-nitrogen oxides profitability and the efficiency of its operations in VPM
NO and NO2 (nitric oxide and nitrogen dioxide) relation to the capital employed. The ROCE is Vopak Project Management IT/OT calculated based on the accounting requirements Information Technology/Operational Technology NPS of the previous lease accounting standard IAS 17, Net Promoter Score; a method of measuring the meaning that the EBIT includes the operating LTI strength of customer loyalty for an organization expenses of the former operating leases and that Lost Time Injury the capital employed excludes right of use assets related to these former operating leases.
Vopak Annual Report 2020 Contact details Contact details
Purpose Business Performance Governance, risk Financial Additional Introduction Sustainability & strategy & market & Outlook & compliance Statements information
Contact details 231
Royal Vopak Media contact Credits Global Communication & Investor Relations Liesbeth Lans Consultancy, concept and design Telephone: +31 (0)10 400 2911 Telephone: +31 (0)10 400 2777 DartGroup, Amsterdam Email: [email protected] Email: [email protected] www.vopak.com Technical realization Investor Relations contact DartGroup, Amsterdam Visiting address Laurens de Graaf Westerlaan 10 Telephone: +31 (0)10 400 2776 3016 CK Rotterdam Email: [email protected] The Netherlands Sustainability contact Postal address Willem van der Zon P.O. Box 863 Telephone: +31 (0)10 400 2561 3000 AW Rotterdam Email: [email protected] The Netherlands
Vopak Annual Report 2020 Annual Report 2020 HERE PLACE FSC LOGO